Analysis of Leading and Potential Sectors to Boost Economic Growth as A Basis For Determining Regional Economic Development Priorities

Abstract

This research is motivated by the economic growth of Blitar City, East Java, Indonesia, which has tended to be low and volatile, necessitating the identification of priority sectors for regional development. Previous studies have generally relied on a single analytical method—such as Shift-Share Analysis, Location Quotient (LQ), or Klassen Typology—providing only a partial assessment of the region's economic potential. Therefore, this study integrates these three methods to identify sectoral shifts, distinguish between base and non-base sectors, identify sectors with potential, and formulate policy recommendations. A quantitative approach with a descriptive research design was employed, utilizing secondary data on the Gross Regional Domestic Product (GRDP) of Blitar City and East Java Province at constant prices by industrial sector for the 2015–2024 period, obtained from Statistics Indonesia (BPS). Shift-Share Analysis was used to evaluate sectoral competitiveness, LQ to identify base and non-base sectors, and Klassen Typology to classify sectors with potential. The results indicate that seven sectors possess a competitive advantage, eleven are classified as base sectors, and six as non-base sectors. The accommodation and food and beverage service sector was identified as a sector with potential, as it demonstrated high growth despite a relatively low contribution to the GRDP. Integrating these three analytical methods provides a more comprehensive framework for identifying leading and potential sectors compared to using a single method, while also offering evidence-based recommendations to support more effective and sustainable regional economic development policies in Blitar City.