Promoting agro-based export as engine of local economy in North-Sumatra, Indonesia

Abstract

In North Sumatera, Indonesia, exports made a contribution to Regional GDP of up to 40 per cent. Approximately 40 per cent of the export value was gained from agro-based products. In order to figure out the impact of agro-based export on local economy, this study pursued to investigate the contribution of agro-based export to: (i) local economic development, i.e. economic growth, (ii) employment creation, and (iii) poverty reduction, and to find out the causality among these variables. The results revealed that agriculture played a very important role in North Sumatra local economy, not only because it was a basis existence for millions households, but also because it is a strategic sector for economic growth, employment creation and poverty reduction, mainly through export of agro-industry products.