Analysis of Infrastructure Contribution to Labor Force Productivity of Industrial Sector in Indonesia
Abstract
The existency of industrial sector as the biggest contributor sector in Indonesian economics and its structure which is labor intensive makes labor force productivity which is gained in industrial sector becomes main factor to determined Indonesian competitiveness. Empirical studies so far shows that environment support-whether in micro and macro-could rising labor force productivity. Meanwhile this support is including availability of adequate infrastructure. Besides the infrastructure, existency of natural resources and human resources also influence to selecting location of industrial factories. The potentials of natural resources and human resources which are support by adequate infrastructure in a region will create a concentration of industrial factories, eventually it will increased agglomeration level. At the end it will increased the productivity of that factories. Estimation result shows that lack of infrastructure availability and human resources in Eastern Indonesia (KTI) makes less number of industrial factories in this area. On the contrary, adequate support of infrastructure and also enough support of human resources in Western Indonesia (KBI) made factories tend to located in this area in order to exploit these resources, which is marked by a huge number of factories. In relation with productivity level is this made industrial agglomeration that occurred in KBI has a significant influence to increase labor force productivity. But in contrary, agglomeration in KTI has not influenced the increasing of labor force productivity. Meanwhile, direct contribution of infrastructure to labor force productivity shows that infrastructure influencing the increasing of productivity in both area. Therefore, acceleration of infrastructure development is necessary for the availability of adequate infrastructure facilities, especially in eastern Indonesia, so it can attract businesses to located in the region. Growing industry in eastern Indonesia will also reduce the gap between KBI and KTI and ensure national defense as a whole because it reduces the economic concentration in a particular area. The concentration of economy in a particular area can be bad for the economy in general, if there is turbulence in the region. In connection with the huge funds needed to improve infrastructure services, both increasing capacity and infrastructure maintenance and care, the government's cooperation with the private sector through the mechanism of government and private partnership is the right choice in overcoming the shortage of infrastructure services.
Collections
- MT - Economic and Management [2878]