Conception and Objectives of Regional Economic Development

Conception and Objectives of Regional Economic Development

Economic growth is one of the important indicators in conducting a development analysis of the economic development of a region. Economic growth can be measured through the growth of a country's Gross Domestic Product (GDP) or region. Gross Domestic Product (GDP) is very necessary in comparing the level of welfare of one country with another or between times more precisely when looking at its growth rate.

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Regional economics analyzes a region as a whole or looks at different regions based on diverse potentials and how to set up a policy that can accelerate the economic growth of the region. The central government gives authority to local governments to regulate their own territories with several applicable provisions. It aims to maximize the potential of the existing area so that it can create new jobs and can improve the economy of the region. However, in reality, it shows that the conditions of each region are not the same, the availability of different infrastructure, the skills of the workforce or HR (Human Resources) are not the same, the population density is different, and others. Thus, various economic activities that are suitable in one region are not necessarily suitable for application in another region. Ferguson's theory (1965) says that the objectives of the existence of economic policy are as follows:

• Full employment is an effort to create at least a low unemployment rate into a staple of central and local government. In people's lives, work not only serves as a source of income, but also provides self-esteem or status for those who work.

• The existence of economic growth is that in addition to providing jobs for the new labor force, it is also expected to improve human life or increase income.

• The creation of price stability is to create a sense of security or tranquility in people's feelings. Because unstable prices will certainly make people feel worried.

Among these economic goals are some things that local governments cannot do if they work alone, such as stabilizing prices. However, on the other hand, because of the narrow coverage area, a region can make policies that are more spatial in nature so that there are things that can be done by local governments better than by the central government. Things that can be better arranged in the regions, as follows: 1. Maintaining environmental sustainability. 2. Equitable distribution of development within the territory. 3. Determination of the leading sector of the region. 4. Make linkages between sectors that are more harmonious within the region so that they become synergistic and sustainable. 5. Fulfillment of regional food needs.

There are two benefits of this regional economy, namely based on macro and micro aspects. The benefits on the macro aspect are viewed from a broader point of view. For example, the central government in seeing the potential of each region is different. Each region has different advantages or potentials. This can be used to set different priority scales for each region. While the benefits in the micro aspect are seen from a narrower or smaller point of view. An example is assisting a regional planner or planner in determining in which part of the territory an activity or project should be implemented.

The development planning is useful for creating high and quality economic growth, among others, through infrastructure development, human capital or increasing human resources (Human Resources), and trade openness. First, that is, through infrastructure development. The lack of ability to provide infrastructure services is one of the factors that results in a high-cost economy in Indonesia, where producers have to bear the burden of high logistics costs. This is because production and distribution to consumers are not supported by access to adequate infrastructure services such as economic, social, and administrative infrastructure. Infrastructure is a basic physical need in developing the usefulness of the public sector through the service of goods and services for public facilities. Without good and adequate infrastructure services, production activities in various sectors of economic activity cannot run. The role of infrastructure in economic growth has become crucial in development policy

Second, the weak point of the quality of human resources (HR). The low quality of human development will have an impact on Indonesia's overall competitiveness. The quality of human resources can be measured through education, health, and income. These factors are very important in determining the productivity of an economy. Knowledge and skills can be improved through a good educational process and good health conditions as well. Education and health play an important role in the development of a country in the improvement of human resources (HR) and development processes. Third, the openness of trade. Regions that are centers of international trade have high economic growth. The increase in import exports certainly demands the availability of high infrastructure and good human resources (HR). A country that implements a policy of trade openness will have a positive effect on the expansion of the export-import market, encourage investment flows, the establishment of international relations, and increase the modernization of technology and the development of science.

A planning expert, Friedmann, who developed the theory of regional development, used the concept of core-periphery to create a typology of a region including:

• Core-regions, as a centralized metropolitan economy. An example is the urban area of Jakarta, Indonesia.

• An upward-transitional region is one that is close to the center and suitable for the development of resources. For example, between the urban area of Jakarta and the urban area of Bandung.

• Areas adjacent to sources or resource-frontier regions are the periphery of new settlements, for example areas - taransmigration areas in Sumatra, Kalimantan, and others.

• Downward-transitional regions are located within countries, for example areas that experience a back wash effect and abroad on a world scale, such as sub-Saharan countries.

      

Therefore, in some developing countries, including Indonesia, development strategies rely on a Growth-Centres approach and put industry as a leading sector. By concentrating the industry in the center of growth, it is hoped that the strategy will be able to solve the problems of diversity and poverty. This is because periphery will develop through the spread effect of growth centers.

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