Strategic Development of Capital-intensive Sectors in Coastal East Java: Infrastructure-energy Integration and Input-output Policy Simulation 2025
DOI:
https://doi.org/10.53572/ejavec.v10i1.199Keywords:
East Java, Capital-Intensive Industry, Input-Output Simulation, Infrastructure Integration, Regional Economic DevelopmentAbstract
East Java, Indonesia’s second-largest economic contributor, holds strategic potential for capital-intensive industrial transformation, particularly in its coastal regions, which are endowed with surplus electricity, natural gas, and port access. This study applies a regional input–output framework to simulate the economic impacts of infrastructure–energy integration on key sectors. Four policy scenarios are examined: business as usual, infrastructure acceleration, energy optimization, and integrated infrastructure–energy intervention, focusing on gross regional domestic product (GRDP), sectoral output, employment multipliers, and intersectoral linkages. The results indicate that the integrated scenario yields the most transformative outcomes, with GRDP growth reaching 6.7%, the highest employment multiplier of 1.45, and substantial output increases in construction (+58.65%) and manufacturing (+49.71%). These findings highlight that synchronized infrastructure and energy policies generate stronger systemic spillovers than isolated interventions, reinforcing forward and backward linkages while enhancing regional competitiveness. The study contributes to regional development discourse by providing evidence-based insights on how infrastructure–energy synergies can accelerate structural transformation in coastal East Java. Furthermore, it aligns with Indonesia’s 2025 national agenda under the Red-and-White Cabinet, emphasizing downstream industrialization, energy sovereignty, and localized resilience.
References
Amelia, A., Dwi Savandha, S., Nuraeni Salsabila, I., Dwi Putri Pramesti, G. N., & Aditia, O. (2025). Assessing Fiscal Inefficiencies and Middle-Class Vulnerabilities: A Critical Analysis of Economic Policies Under President Prabowo’s Administration. Cristal International Journal of Interdisciplinary Research, 1(1), 46–56. https://doi.org/10.64042/f2kqdv03
Anshori, W. Z., Winarti, A. S., & Wijayanti, D. L. (2025). The Effect of Life Expectancy , Average Years of Schooling , and Total Labor Force on Gross Regional Domestic Product of Yogyakarta Special Region ( 2017-2023 ). Buletin Ekonomika Pembangunan, 6(1), 13–23. https://doi.org/10.21107/bep.v6i1.29613
Aprianto, N. E. K., Fauziah, S. N., & Oktaviani, T. (2025). Regional Economic Development: The Industrial Agglomeration Area Development in Improving Economic Growth in Cilacap Regency. Citizen : Jurnal Ilmiah Multidisiplin Indonesia, 5(2), 425–437. https://doi.org/10.53866/jimi.v5i2.724
Bhattacharyya, S. C. (2019). Energy economics: concepts, issues, markets and governance. Springer Nature.
Clemente, G.P., Cornaro, A., Grassi, R., & Rizzini, G. (2024). Strategic energy flows in input‐output relations: A temporal multilayer approach. Applied Stochastic Models in Business and Industry, 40(2), 306–330. https://doi.org/10.1002/asmb.2783
Daniel, H., Purba, N., & Simamora, N. (2023). The Effect of Economic Growth, Open Unemployment Rate and Human Development Index on Poverty in North Sumatra. Indonesian Journal of Advanced Research, 2(5), 391–402. https://doi.org/10.55927/ijar.v2i5.4145
Firdaus, A. M., Kusumastanto, T., & Nurjaya, I. W. (2024). Economic Policy of Renewable Energy: Development of Marine Current Energy in Madura Straits, Indonesia. Coastal and Ocean Journal (COJ), 8(2), 20-37. https://doi.org/10.29244/coj.v8i2.61444
Firmansyah, F., Prasetyo, A.B., Oktavilia, S., Azyzia, S.H., Puspita, D.W., Boykhair, A. & Nugraha, F., 2023. Economic Recovery Strategy of Sectoral Industries Post COVID-19: Input–Output Model Simulations. Economies, 11(5), 151. https://doi.org/10.3390/economies11050151
Friedmann, J. (1966). Poor regions and poor nations: Perspectives on the problem of Appalachia. Southern Economic Journal 32(4), 465-473. https://doi.org/10.2307/1055900
Fujita, M., Krugman, P., & Mori, T. (1999). On the evolution of hierarchical urban systems. European Economic Review, 43(2), 209-251. https://doi.org/10.1016/S0014-2921(98)00066-X
Hapsari, T. (2022). The effect of infrastructure on economic growth in Indonesia. Journal on Economics, Management and Business Technology, 1(1), 1–09. Retrieved from www.plus62.isha.or.id/index.php
Hirschman, A. O. (2012). The rise and decline of development economics. In The theory and experience of economic development (pp. 372-390). Routledge.
Leontief, W.W. (1941) The Structure of the American Economy, 1919-1929: An Empirical Application of Equilibrium Analysis. Harvard University Press.
Lestari, R. I., Wardono, B., Handajani, M., Supari, S., Juniati, H., Sunarno, M. T. D., & Prayogi, E. (2025). The interplay of road infrastructure and regional finance in driving economic growth: Insights from East Kalimantan. Journal of Open Innovation: Technology, Market, and Complexity, 11(1), 100444. https://doi.org/10.1016/j.joitmc.2024.100444
Lito, L. S. J., Samudro, B. R., & Soesilo, A. M. (2025). Digital Transformation and Regional Development Disparities in Indonesia. The Fourth International Conference on Government Education Management and Tourism (ICoGEMT-4), 4(2023), 1–13.
Lochot, V., Khalilpour, K., Hoadley, A. F. A., & Sánchez, D. R. (2024). French economy and clean energy transition: A macroeconomic multi-objective extended input-output analysis. Sustainable Futures, 8, 100285. https://doi.org/10.1016/j.sftr.2024.100285
Ma, H., Cui, G.H., Hussain, Z. & Shao, L., (2024). Investigating the simultaneous impact of infrastructure and geographical factors on international trade: Evidence from Asian economies. Heliyon, 10(1), e23791. https://doi.org/10.1016/j.heliyon.2023.e23791
Månberger, A., Bauer, F., & Nilsson, L. J. (2025). The climate-related risk profile of the energy-intensive and natural resource-based industries: Evidence from 2020–2023. Cleaner Engineering and Technology, 27, 101026. https://doi.org/10.1016/j.clet.2025.101026
Mayraina, A., & Badriyah, N. (2025). Analysis Of The Effect Of Economic Growth and Capital Expenditures On Regional Financial Independence In Provinces On The Island Of Java. Indonesian Economic Review, 5(1), 53-66. https://doi.org/10.53787/iconev.v5i1.47
Miller, R.E. & Blair, P.D., (2022). Input–Output Analysis: Foundations and Extensions (3rd ed.). Cambridge University Press.
Myrdal, G. (1957). Economic Theory and Under-Developed Regions. Gerald Duckworth.
Nugroho, R., Saraswati, E. & Prasetio, R. (2024). Input–output analysis for sustainable economic transition in Indonesia. Regional Studies, 58(3), pp.405–422.
Nurkholilah, D., Augustinah, F., Albab, U., Kamariyah, S., & Ali, H. (2025). The Effectiveness Of The Implementation Of The Government Agency Performance Accountability System (Sakip) In The East Java Provincial Government. Journal of Studies in Academic, Humanities, Research, and Innovation, 2(1), 24–39. https://doi.org/10.71305/sahri.v2i1.260
Perroux, F. (1955). Note sur la notion de pôle de croissance (pp.307–320). Presses Universitaires De France.
Pham, L., Nguyen, T. & Le, H., (2023). Port-based industrial zones and export performance in Southeast Asia. Journal of Regional Science, 63(2), pp.321–345.
Porter, M.E., (1998). Clusters and the new economics of competition. Harvard Business Review, 76(6), 77–90.
Prabowo, S., (2025). Inaugurates Southeast Asia’s largest integrated EV battery industry ecosystem in Karawang [Press release]. Indonesia Business Post, 29 June.
Rahardjo, B., Setiawan, D. & Wibowo, H., (2024). Infrastructure bottlenecks and investment gaps in Eastern Indonesia. Journal of Development Studies, 60(4), 456–472.
Ridhwan, M. H. A., Hidayat, A. A., Pratiwi, N., & Sulistiyo, K. (2024). Reviving The Manufacturing Industry Through Servicification Strategy: Evidence from Indonesian Microdata (Bank Indonesia Working Paper WP/03/2024).
Richardson, H.W., (1985). Input–Output and Regional Economics. Wiley.
Romer, P. M. (1990). Capital, labor, and productivity. Brookings papers on economic activity. Microeconomics, 1990, 337-367. https://doi.org/10.2307/2534785
Sari, W. F. (2025). Determinants of Economic Growth in Java: Per Capita Expenditures, Population, and Contribution of Indonesian Democracy. Journal of Development Economic and Social Studies (JDESS), 4(1), 110–128. https://doi.org/10.21776/jdess.2025.04.1.09
Satriawan, B., Utomo, S. J., & Sari, A. N. (2025). Economic Growth in East Java: How Significant is the Role of the Non-agricultural Sector? KnE Social Sciences, 10(5), 72–85. https://doi.org/10.18502/kss.v10i5.18100
Suraji, A., Cakrawala, M., Irawan, D., & Mas, N. (2025). Accessibility and Economic Impact due to Toll Road on the Island of Java. Proceeding of International Conference on Digital, Social, and Science, 2(1), 261–275. https://doi.org/10.62201/by0bxa72
Sato, M. & Sasaki, H., (2024). Capital intensity and infrastructure requirements in emerging economies. Journal of Development Economics, 167, art.102716.
Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94. https://doi.org/10.2307/1884513
Stern, D.I. (2011). The role of energy in economic growth. Annals of the New York Academy of Sciences, 1219(1), 26–51. https://doi.org/10.1111/j.1749-6632.2010.05921.x
Todaro, M.P. & Smith, S.C. (2015). Economic Development (12th ed.). Pearson.
UNEP, (2020). Global Green Industrial Policy Report. United Nations Environment Programme.
Takam, P. H., & Wunderlich, R. (2025). Numerical Simulation of the Input-Output Behavior of a Geothermal Energy Storage. Energies, 18(6), 1–21. https://doi.org/10.3390/en18061558
Utama, I. R., & Sutanta, H. (2025). A Model for Implementing the UN-IGIF in Geospatial Information Infrastructure Development for Indonesian Local Governments. International Journal of Geoinformatics, 21(6), 62–78. https://doi.org/10.52939/ijg.v21i6.4235
Uyun, S. I., Wijaya, R. S., & Perdana, P. (2025). Analysis of the Effect of Per Capita GRDP, Education, Income Inequality and Investment on Poverty in Urban Areas in East Java Province. International Journal of Business and Applied Economics, 4(4), 1742–1758. https://doi.org/10.55927/ijbae.v4i4.190
Wardaningrum, N. S., Ayu, P., & Purwanti, P. (2025). Determinants of Poverty in Five Regencies of East Java. International Journal of Economic Literature (INJOLE), 2(12), 1999–2016.
Wei, Z., & Liu, C. (2025). Nonlinear input-output analysis of transitional shear flows using small-signal finite-gain stability. Physical Review Fluids, 10(10), 103903. https://doi.org/10.1103/pmnc-sdl2
Widodo, S. & Tambunan, T. (2025). Downstream industrial policy under Indonesia’s 2025 economic strategy. Asian Policy and Economy, 12(1), pp.1–19.
World Bank, 2017. Special Economic Zones: Performance, Lessons Learned, and Implications for Zone Development. World Bank.
Zhao, X., Chen, Y. & Li, W. (2024). Infrastructure energy integration for regional competitiveness. Energy Economics, 126, art.105327.
Zhou, Z., Wang, S., Jiang, J., Li, H., Zhao, J., & Yu, D. (2025). Optimizing wind turbine blade pitch control via input output differential model free adaptive control. Scientific Reports, 15(1), 1–11. https://doi.org/10.1038/s41598-025-88711-z
Zoysa, R. S. de, Gemilang, M. S. C., Al-Haq, A. S., Rama, M., & Sari, A. A. (2025). Afterlives of reclamation: coastal privatization, distanced dispossession, and more-than-human calcifications in Jakarta Bay. Maritime Studies, 24(3). https://doi.org/10.1007/s40152-025-00443-y
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 samas adimisa mishbah habibie, Ribut Santoso, Yusma Abinaya Tahsina Akmal, Daffa Akbar Azhar
This work is licensed under a Creative Commons Attribution 4.0 International License.
