East Java Economic Journal

Spatial Analysis of Spillover Effects in The Manufacturing Industry: The Influence of Infrastructure and Industrial Estates in East Java Through an Open Data Approach

2025-10-01T11:58:26+00:00

The transition from labor-intensive to capital-intensive industries is a key driver of long-term economic growth. East Java Province holds a strong foundation in the manufacturing sector, positioning it as a locomotive of national industrial growth. While local industrial estates contribute to increasing value-added, the concentration of economic activity also carries the risk of widening spatial disparities between regions. This study aims to examine the spillover effects of industrial estates and infrastructure on manufacturing output. Furthermore, it classifies districts and municipalities based on the most significant and promising variables for the development of new industrial zones. The dependent variable used is manufacturing output, while the independent variables include toll road length, the number of Base Transceiver Stations (BTS), Night-Time Lights (NTL), the Human Development Index (HDI), manufacturing investment, manufacturing labor, minimum wage, and an industrial estate dummy. The analytical method employed is spatial analysis using the Spatial Durbin Error Model (SDEM). The results indicate the presence of positive spillover effects from industrial estates, while BTS and NTL have a direct influence on manufacturing output. Conversely, toll road length, HDI, manufacturing investment, and manufacturing labor primarily affect the sector indirectly. Potential areas for future industrial estate development include urban centers such as Kediri City and Malang City.

Spatial Analysis of Tourism Economic Networks in East Java: A Modified Gravity Model Approach with Big Data Integration

2025-10-01T11:58:24+00:00

Research on the spatial structure of tourism economic networks remains limited, whereas understanding how tourism economic components are interconnected and interact within a geographical area is crucial. This study aims to fill these limitations by analyzing the strength of interaction and the spatial structure of the tourism economic network in East Java, both now and in the future. This research employs a modified gravity model that integrates big data as a proxy for tourism economic variables. Spatial network analysis was conducted using Spatial Design Network Analysis (SDNA) with four centrality algorithms. The results showed that the main centers or hubs of the tourism economic network in East Java are Batu City, Malang Regency, and Surabaya City, based on the total number of nodes or variables. While the analysis per variable revealed differences in the main centers, indicating complexity and diversity in the interactions, connections, and clusters of the tourism economic network in East Java. Road network planning in the East Java Provincial RTRW until 2043 is predicted to have a significant impact on the connectivity, attractiveness, and accessibility of the road network, which in turn will affect tourism economic growth in East Java. However, the uneven improvement of accessibility, especially in Madura Island, is a challenge in itself. This research offers valuable insights into the spatial dynamics of the tourism economic network in East Java and its implications for regional economic development, providing policy recommendations to optimize the impact of road network planning on the tourism sector.

Environmental Efficiency of Rice Farming in East Java

2025-10-01T11:58:20+00:00

Sustainable agriculture is not only global agenda, but also becomes national and regional agenda. Rice farming is a key factor of national food security, where East Java province has a vital role as the largest rice producer in Indonesia. Unfortunately, excessive practices in agriculture lead to detrimental impact on environment, such as greenhouse gas (GHG) emissions, land degradation and water pollution (eutrophication). This study aims to measure environmental efficiency of rice farming in East Java and also to analyze its determinants. This study employs stochastic frontier model to measure environmental efficiency as well as to examine the effects of various factors. The results shows that environmental efficiency of rice farming in East Java is generally low, with average score 0.463. This result suggests that there is opportunity to enhance environmental efficiency of rice farming in East Java by 53.7%. The low environmental efficiency is influenced by the low labor quality (education and managerial quality), low technology adoption, physical environment, and institutional environment (land ownership, counseling, credit access, social network). Based on this study, various policy interventions can be implemented to improve environmental efficiency.

Exchange Rate and Trade Balance of East Java Province: J-Curve Evidence and ARDL Approach

2025-10-01T11:58:22+00:00

The primary objective of this study is to examine the impact of exchange rate fluctuations on the trade balance between East Java Province and its principal trading partners—namely China, Japan, and the United States—while also assessing the presence of the J-Curve phenomenon. The Autoregressive Distributed-Lag model estimation indicates that the exchange rate has an insignificant effect on East Java’s trade balance in the short run, while exerting a statistically significant negative influence in the long run. The empirical findings indicate the absence of a J-Curve phenomenon in East Java’s trade balance with its main trading partners. This outcome implies that the region’s trade flows are predominantly price-inelastic, as exchange rate depreciation fails to generate the expected short-run deterioration followed by long-run improvement. Therefore, currency depreciation is not an effective policy instrument for enhancing export performance, as its benefits are confined to a limited subset of sectors.

Analysis and Strategy of Strengthening Green Economy Through the Value Chain Concept to Support Downstreaming of Coffee Farming in East Java

2025-10-01T11:58:19+00:00

This study aims to analyze the coffee value chain and formulate strategies to strengthen downstream coffee farming in East Java Province within a green economy framework. Primary data were collected through surveys and interviews conducted in 2024 with three key actors: farmers, historians, and government officials. The analysis was conducted using the Hayami method to measure product added value, Rapfish to assess value chain variability, and AHP to determine priority strengthening strategies. The results indicate that the greatest added value is obtained when farmers process coffee from cherries to ground coffee. A unique analysis indicates that ecological and market dimensions still require further development. The resulting strategic priorities are training and certification of Good Agricultural Practices (GAP), facilitating market access through e-commerce and direct trade, and local government policies that encourage the use of local coffee. These findings emphasize the importance of downstream coffee processing as a means to enhance farmer welfare while promoting the transition to a green economy in East Java.

The Impact of Industrial Agglomeration on Labor Misallocation in East Java

2025-10-01T11:58:17+00:00

Agglomeration is believed to offer various advantages to firms located within its area. One such benefit is the potential reduction in labor misallocation. However, theoretical expectations do not always align with real-world practices. This study aims to analyze the impact of industrial agglomeration areas on the degree of labor misallocation in East Java by utilizing panel data from the Large and Medium Manufacturing Industry Survey (IBS) for the period 2010–2015. The analysis employs a fixed effects panel regression method. The findings reveal that firms located within agglomeration areas experience a labor misallocation level 2.52 times higher than those outside such areas. Additionally, a 1% increase in the number of workers leads to a 0.122% increase in labor misallocation. Exporting firms tend to exhibit a higher level of misallocation compared to non-exporting firms, by 1.926 points. Moreover, the study finds that a higher Herfindahl-Hirschman Index (HHI) among firms also contributes to greater labor misallocation. Specifically, a one-point increase in the HHI is associated with a 0.7% rise in labor misallocation

Economic Valuation of Three Coastal Tourism Objects Owned by the Local Government of Tulungagung Regency

2025-10-01T11:58:15+00:00

This study aims to evaluate three beach tourism destinations managed as assets by the Tulungagung Regency Government, namely Popoh Beach, Sidem Beach, and Sine Beach, to optimize their management and revenue generation for the benefit of the community and the region. The research employs an inferential quantitative method using negative binomial regression techniques, based on primary data collected through direct visitor surveys conducted in 2023. The fundamental model is developed using the Travel cost Method (TCM) as a concept to assess demand for environmental services in the form of recreational activities. The economic valuation results show that using the TCM method, the three beaches possess moderate potential value for commercialization. However, based on the annual revenue data, the total income generated by these beaches remains below IDR 1 billion, indicating challenges in promotion/branding, management, and commercialization (sales) strategies that need to be addressed moving forward. Meanwhile, the calculation of Willingness to pay (WTP) using the Contingent Valuation Method (CVM) focuses solely on the willingness to pay for increased ticket prices. When analyzing the consumer surplus values of each beach destination, it is evident that the consumer surplus significantly exceeds the total WTP