Volume 8, Issue 8, August 2023 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

Industrial Influence Currently & Great

on Manufacturing Industry Performance and
its Impact on Economic Growth (GRDP) in
Banten Province, 2016 – 2021
Marhaendro Purno, Seri Irawan, Indah Jayanti, Dwi Ferdiyatmoko Cahya Kumoro, Supriyanto.

Abstract:- The purpose of this study is to determine the

effect of medium and large industries on the performance Industry in Indonesia is a significant economic
of the manufacturing sector and the implications for component (Azwina et al., 2023). The presence of industry
economic growth. The approach used is a quantitative facilitates the rapid growth and improvement of our economy,
methodology, and the dataset used consists of time series thereby causing a transformative shift in the structure of the
data from 2016 to 2021, obtained from the Central national economy. In Indonesia, the progress of various
Statistics Agency for Banten Province (BPS Banten). In industries with various activities contributes to facilitating
addition, library data provided additional support for this development efforts. Currently, many countries in the world
research. To test the hypothesis, especially the effect of continue to strive to improve their economy. The procedures
medium and large industries on the performance of the carried out relate to industrial affairs. This industry is
manufacturing industry and its effect on economic undeniably a tremendous factor in facilitating trade. They
growth (GRDP), ECM analysis techniques are used to engage in competition among themselves to secure positions
determine the relationship between the independent in the global market. Due to free trade in the global market,
variables and the dependent variable. The findings of this countries are involved in trading activities. One of the
study indicate that the results of the ECM estimation supporting factors is the industrialization sector (Yogo
further indicate that only the manufacturing industry Subekti & Muhammad Yasin, 2023).
performance variable has an important impact on short-
term economic growth. Broadly speaking, economic growth can be described as
an increase in the ability of the economy to produce goods
Keywords:- Economic Growth, Manufacturing, Industry. and services (Masloman, 2018). Economic growth is an
important indicator for analyzing a country's economic
I. INTRODUCTION development. Economic growth shows the amount of
economic activity that generates additional income for a
Industry is a discipline that uses various skills, diligent community in a certain period (Utami, 2020). Basically
effort and special tools in the field of processing and economic activity requires the use of production factors to
distribution of agricultural products as its foundation. produce output. This process thus generates a flow of rewards
Therefore, industry is widely recognized as the most for the factors of production owned by society. Along with
important factor in meeting the economic needs related to the the desire for economic growth, people's income as owners of
planet, especially after agriculture, plantations, and mining, production factors also want to increase. increased
which shows a strong correlation with the terrestrial world. (Pelengkahu et al., 2021).
According to Purwita (2015), industrial locations are
increasingly moving away from the mainland, which serves The manufacturing industry is an important sector that
as a fundamental economic, cultural, and political foundation. has contributed significantly to supporting national economic
growth as a whole. However, the COVID-19 pandemic has
The industrial sector in a broad sense can be interpreted had a significant impact on the operations of the
as a productive and commercial business which includes manufacturing sector in Indonesia. There are several
human economic activities. In accordance with Law no. 5 of challenges currently being experienced by industry players in
1984, what is meant by "industry" is an economic business the country due to the impact of the COVID-19 pandemic.
engaged in the conversion of raw materials, semi-finished Initially, individuals experienced disturbances in processing
goods, or finished goods into goods whose use is increased, deals and disbursement (Masruri, 2022). There are many
which includes the field of industrial engineering. According sectors that cannot transition their production, such as the
to Siahaan (2019), the industrial sector is currently the textile industry, which in turn produces personal protective
leading sector in economic activity. equipment (PPE) and masks. The second challenge relates to
the increased cost of primary and auxiliary materials. This has
In a broad sense, the industrial sector can be classified an impact on supply and demand. The problem faced is
into three different categories, namely large-scale industry, related to the inability to exercise control over prices, because
medium-scale industry and small-scale industry. The size of this difficulty is experienced by all countries involved in the
the workforce usually ranges from 20 to 99 people, and the supply of raw and auxiliary materials. The next challenge
last category represents small industries with around 5 to 19 relates to exchange rate volatility. As a result of
employees. It should be noted that, on average, these entities implementing these health protocols, it is evident that the
do not have legal entity status (Lesmana, 2014).

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Volume 8, Issue 8, August 2023 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
industry is currently facing challenges related to a decrease in difficulties marked by the increasing number of people living
its production efficiency. Due to the implementation of below the poverty and unemployment line. Poverty is still an
physical distancing measures, there has been a decrease in the urgent national issue, which until now has not been
number of employees, leading to temporary layoffs and a effectively resolved. Based on data provided by BPS (2007),
significant reduction in production efficiency. Furthermore, it can be seen that most of Indonesia's population, around 32.5
logistical challenges related to transportation arose. million people or around 14.2 percent, lived below the
According to Sarkodie and Owusu (2021), two factors poverty line in 2007. The conditions experienced by
contributing to the challenges faced are rising shipping costs individuals who live in poverty are limited availability of job
and operational limitations imposed by regional regulations. opportunities, resulting in high unemployment rates.
Indonesia has faced persistent employment problems
Assessment of the progress of a nation is determined by stemming from the failure to fully integrate large portions of
economic expansion and poverty alleviation. Every nation its rapidly growing and sizable workforce. Even during
always strives to achieve optimal economic growth and periods of accelerating economic expansion, employment
alleviate poverty (Ginting & Rasbin, 2010). In almost every conditions do not appear to have improved significantly.
country around the world, the main prerequisite for achieving Instead, the situation has worsened as a result of the economic
poverty alleviation is achieving economic growth. However, crisis, leading to a decline in the quality of education,
in developing countries such as Indonesia, the achievement healthcare and overall living standards.
of economic growth was accompanied by the emergence of

Fig. 1: Banten Province GRDP Data for 2016 – 2021

Economic growth is undoubtedly one of the key II. RESEARCH METHODS

indicators for evaluating the effectiveness of local
government in the contemporary autonomy era (Alfarabi et The research method used in this research is descriptive
al., 2014). Assessment of local government performance will and interpretive research. Interpretive research, as defined by
be increased in direct proportion to the level of economic Lavrakas (2013), is research that establishes causal
growth achieved by the region. It is hoped that substantial relationships and examines the relationship between two or
economic growth will serve as a catalyst to drive progress of more variables studied and how they influence one another.
society as a whole. These advances include improving The main purpose of explanatory research is to test
infrastructure, enhancing public services provided by hypotheses and evaluate the effect of the independent
government entities, and addressing fundamental aspects of variables on the dependent variable.
human existence, particularly individual well-being.
The research lasted for ten years, starting in 2016 and
Therefore, based on the phenomena that have been ending in 2021. The research data was conducted in Banten
described previously, the researcher is interested in Province. The sample used in this study includes variable data
researching "The Influence of Large & Large Industries from 2016 to 2011. The number of samples in this study is 48
on the Performance of the Manufacturing Industry and (forty) samples, including annual data from 2010 to 2019.
Its Impact on Economic Growth (GDP) of Banten This data correlates with an examination of the performance
Province in 2016 – 2021” of the manufacturing sector and related economic growth, as
measured by regional gross domestic product (GRDP).

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Volume 8, Issue 8, August 2023 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
The data analysis technique used in this study is ECM III. RESULTS AND DISCUSSION
(Error Correction Modeling). The main objective of this
regression analysis is to fully understand the relationship A. Data analysis Stationary Test
between independent and dependent variables partially or Stationarity of the data at the testing level There is no
simultaneously. single level of the variable which is stationary, so it is
necessary to re-test the extent to which each variable is
stationary. Following are the results of integration testing.

Table 1: Integration Testing Results

Research variable t-statistik adf Meaning Information
Medium & Large Industry -9,258785 0,0000 not moving
Manufacturing Industry Performance -9,258785 0,0000 not moving
Economic Growth (GRDP) -8.590211 0,0000 not moving

The table presented above displays the results of the B. Cointegration Test Results
ADF statistical test on initial differences. This shows that the Cointegration test aims to test whether the residual
null hypothesis is rejected, meaning that the data for all regression is stationary or non-stationary. The cointegration
variables becomes stationary after being exported once. The test can only be carried out when the relevant variables have
probability value is below 0.05. This means that all these the same degree of integration.
variables no longer show unit root problems and have
stationary data conditions at that level. Originally, the degree Table 2 shows the static (residual) RESID at various
of differentiation or integration was one. levels of significance. The residuals from the stationary
cointegration regression show that all variables have a long-
term equilibrium relationship that allows the short-term error
correction model formulated by Engle-Granger.
Table 2: Cointegration Testing Results
hypothesized Footsteps 0,05
CE number Nilai Eigen Statistics critical value Problem.**
There isn't any * 0,383044 40.90610 29.79707 0,0018
At most 1 * 0,290292 18.69005 15.49471 0,0159
At most 2 0,061436 2.916588 3.841466 0,0877

C. ECM Estimation Results

Table 3: ECM Estimation Results

Variable Coefficient Error Standard T-statistics Problem
D(SB) 0,6446 0,5293 1,2178 0,2434
D(KM) -0,1194 0,0319 -3,7424 0,0022
C 0,0994 0,0953 1,0428 0,3147
E2(-1) -0,8955 0,2188 -4,0933 0,001

The ECM-EG estimation results show that the REFERENCES

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