Agricultural Sector Investment Need in Increasing Economic Growth

Muhammad Nasir, Nurul Faizun, Mohd. Nur Syechalad


This paper is aimed to analyze the need of investment in agricultural sector in increasing economic growth in Aceh Province. The priority in developing agricultural commodities increases economic growth in Aceh Province. This research used secondary data sources from Indonesian Statistic Board (BPS) and other related data sources. Meanwhile, the research method used is Incremental Capital Output Ratio (ICOR) Analysis. Based on the research results, it is found that the ICOR in crop plantation, livestock, forestry, and fisheries sub sectors are 2.926, 0.000, 0.108, and 0.298. This means that in achieving economic growth by 1 percent in all four commodities, its need the growth of investment in crop plantation, livestock, forestry, and fisheries sub sectors as much as 2.926, 0.000, 0.108, and 0.298 percent each. Furthermore, in achieving 4 percent economic growths, the developing of commodities that have the effect on economic welfare, it needs the investment for the five years period as much as 286 billion rupiah or equivalent with 58.1 percent of Gross Domestic Regional Product (GDRP) of Aceh Province. Thus, based on the research results, it is recommended that the Aceh Government should promote investment in agricultural sector in promoting economic growth in Aceh Province.


Investment, Incremental Capital Output Ratio (ICOR), agricultural sector, economic growth.

Full Text:



Annas Wibisono, G., & Darwanto, D. (2016). Strategy of Strengthening Social Capital of Farmer Group in Agricultural Development. JEJAK: Jurnal Ekonomi Dan Kebijakan, 9(1), 62-81. doi:

Aurora A.C, Teixerra, Anabela S.S, Queros. (2016). Economic Growth, Human Capital and Structural Change: A Dynamic Panel Data Analysis. Research Policy, Vol.45 (8): 1636-1648.

Baba, S.H, A.S. Saini, K.D. Sharma, and D.R. Thakur. (2010). Impact of Investment on Agricultural Growth and Rural Development in Himachal Pradesh: Dynamics of Public and Private Investment. Ind.Jn of Agri.Econ, Vol. 65, No.1, Jan-March.

Boediono. (1999). Ekonomi Moneter. Yogyakarta: BPFE.

BPS. (2012). Aceh Dalam Angka 2012. Banda Aceh: BPS Propinsi Aceh.

BPS. (2013). Aceh Dalam Angka 2013. Banda Aceh: BPS Propinsi Aceh.

BPS. (2014). Aceh Dalam Angka 2014. Banda Aceh: BPS Propinsi Aceh.

BPS. (2014). PDRB Propinsi Aceh Menurut Lapangan Usaha 2010-2014. Banda Aceh: BPS Propinsi Aceh.

Campano, Fred, Alberto Costantiello, Dominick Salvatore. (2016). Capturing the Effects of Changing Capital-Intensity on Long-term Growth in Developing Countries. Journal of Policy Modelling, 38: 759-765,

Danie, Satrio. (2010). “The Analysis of Impact of Investment in Pulp and Paper Industry on Employment Opportunity and Households Income in Indonesia.” Thesis. Semarang: Universitas Dipenogoro.

Dillon, H.S. (2004). Pertanian Mandiri. Jakarta: Penebar Swadaya.

Ewubare, Dennis Brown, and Anuli Regina Ogbuagu. (2015). Capital Accumulation and Economic Growth in Nigeria “Endogeneous Growth Approach”. IOSR Journal of Economics and Finance, Vol.6 (6): 49-64.

Hamoraon, Haroni Doli. (2005). “The Analysis of Causality Between Consumption and Economic Growth in Indonesia”. Thesis. Medan: Universitas Sumatera Utara.

Herliana, Lena. (2004). “The Role of Agricultural Sector in Indonesian Economy: Decomposition Analysis for Economic and Sosial Account System.” Thesis. Bogor: Institut Pertanian Bogor.

Jenicek, Vladimir. (2016). Economic Growth in the Develoment Economy. Agric.Econ Journal No. 62, 2016(2): 93-99,http:// (accessed September 9, 2016).

Kalangi, L.S. (2006). “The Impact of Investment in Agricultural Sector and Agroindustry in Labor Absorption and Income Distribution.” Thesis, Bogor: Institut Pertanian Bogor.

Lavers, Tom and Festus Boamah. (2016). The Impact of Agricultural Investment on State Capacity: A Comparative Analysis of Ethiopia and Ghana. Geoforum Journal, 72: 94-103,

Mankiw, N. Gregory. (2000). Macroeconomics. New York: Worth Publisher.

Nolte, Kerstin. (2014). Large-scale Agricultural Investment Under Poor Land Governance in Zambia. Land Use Policy Journal, 38: 698-706.

Orji, Anthony, and Peter N. Mba. (2015). Foreign Private Investment, Capital Formation and Economic Growth in Nigeria: A Two Stage Least Square Approach. Journal of Economics and Sustainable Development.

Pelinescu, Elena. (2015). The Impact of Human Capital on Economic Growth. Procedia Economics and Finance.

Rahmadin, Muhammad. (2013). “The Impact of Investment and Economic Growth on Unemployment Rate in Aceh Province.” Thesis. Banda Aceh; Universitas Syiah Kuala.

Rodrik D. (2003). Introduction: What Do We Leran from the Country Narratives? In: D. Rodrik D. (ed.): In Search of Prosperity: Analystic Narratives on Economic Growth. Princeton: Princeton University Press.

Romer. (1996). Advanced Macroeconomics. New York: McGraw-Hill Companies, Inc.

Shuaib, I.M, and Dania Evelyn Ndidi. (2015). Capital Formation: Impact on the Economic Development of Nigeria 1960-2013. Europian Journal of Business, Economics, and Accountancy, Vol.3, No. 3.

Sukirno, Sadono. (2004). Pengantar Teori Makroekonomi. Jakarta: PT. Raja Grafindo Persada.

Susanti, Ervin Nora. (2003). “The Impact of Investment Change and Productivity of Fisheries Sector on Macroeconomy Performance and Sectors in Indonesia.” Thesis. Bogor: Institut Pertanian Bogor.

Susilowati, Sri Hery, Prajogo Utomo Hadi, Supena Friyatno, Muchjidin Rachmat, Mohamad Maulana, Miftahul Azis. (2012). Estimasi Incremental Capital Ouput Ratio (ICOR) Untuk Perencanaan Investasi Dalam Rangka Pembanguna Sektor Pertanian. Jurnal Agro Ekonomi, Vol. 30, No. 2,

Tambunan, Tulus. T.H. (2003). Perkembangan Sektor Pertanian di Indonesia: Beberapa Isu Penting. Jakarta: Ghalia Indonesia.

Todaro, Michael P and Stephen C. Smith. (2004). Development Economics in The Third World. Jakarta: Erlangga.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.