The Effect Of Spatial Concentration Of Manufacturing Industries On Local Economic growth

Spatial concentration of economic activities especially in manufacturing industries has been an interesting phenomenon to analyze since it may give the positive impact for local economic performance. The objective of this research is to investigate the effect of spatial concentration of manufacturing industries on local economic growth in Sukabumi regency. Using OLS on panel data we estimated both production function and output growth model by combining 45 districts data (cross sectional data) in 5 year (2001- 2005/time series data). We use Location Quotient (LQ) form which represents the industrial concentration index as one of important variable in determining industry output. The results show that the industrial concentration indices (LQ) are statistically significant in affecting both production level and the output growth level in positive directions. Using LQ indices we found that food and beverage industry, textile and wearing apparel industry and fabricated metal and machinery industry, which have the LQ value greater than 1, are the main sub-sectors in manufacturing industry in Sukabumi regency.