Analysis of the Impact of the Base Sector and Agglomeration in the Manufacturing Industry on Economic Growth in Banten Province

Rafika Farihanisa Adisti () and Andika Pambudi ()
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Rafika Farihanisa Adisti: Pertamina University, Faculty of Economics and Business
Andika Pambudi: Pertamina University, Faculty of Economics and Business

A chapter in Proceedings of the International Conference on Contemporary Risk Studies (ICONIC-RS 2025), 2026, pp 123-142 from Springer

Abstract: Abstract This study aims to examine the role of the manufacturing sector in revitalizing economic growth in Banten Province. The Location Quotient (LQ) method was employed to determine the base and non-base sectors of the manufacturing industry in each region, while the Balassa Index was applied to identify the concentration of manufacturing industries (agglomeration) across districts and municipalities in the province. Banten consists of eight administrative regions, all of which were included in the analysis. Panel data regression was used to analyze the impact of base sectors and agglomeration on economic growth in Banten from 2017 to 2022. The results indicate that both base sectors and industrial agglomeration, along with the human development index and investment as control variables, have a significant positive effect on regional economic growth. In addition to regression analysis, this study also examined the development of base sectors using the LQ formula as an alternative proxy for analyzing industrial agglomeration, showing that four regions fall into base and non-base categories for the manufacturing sector. Similarly, the Balassa Index analysis revealed that four regions are classified as agglomerated and non-agglomerated in terms of manufacturing industry. These findings highlight that the manufacturing sector, supported by industrial agglomeration, human development, and investment, plays a crucial role in promoting economic growth in Banten Province.

Keywords: Agglomeration; Base Sector; Economic Growth; Manufacturing Industry; Panel Data Regression (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-2-38476-595-9_10

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