Reorientation of Surabaya's Economic Structure: Shifting Base Sectors and Growth Dynamics 2016–2021

Abstract

Surabaya City is the largest economic center in East Java Province, with a contribution consistently above 24 percent to the total Gross Regional Domestic Product (GRDP) of 38 regencies/cities in East Java in the 2018-2021 period. However, this contribution shows a downward trend from 24.35 percent (2018) to 24.03 percent (2021), while the city's GRDP growth rate remained above the East Java Province average throughout 2016-2019 before both contracted due to the Covid-19 pandemic in 2020. This phenomenon of declining share alongside relatively high growth indicates a structural shift that warrants a sectoral approach to study. The novelty of this research lies in the unification of aggregate growth data, sectoral Location Quotient (LQ) analysis results, and data on the city's GRDP share to the province into a coherent discussion framework, while triangulating the LQ results with other independent studies using different data coverage to test the consistency of the findings. This study aims to identify the basic and non-basic sectors of the Surabaya City economy and the shifting patterns of their shares in East Java Province in the 2016-2021 period, using a quantitative descriptive method based on secondary data on the GRDP of Surabaya City and East Java Province by business sector published by the Central Statistics Agency (BPS). The findings show that eleven of the seventeen sectors are classified as basic sectors (LQ>1) on average for the 2016-2021 period, with the highest LQ in the Corporate Services sector (2.93) and the Provision of Accommodation-Food and Beverage (2.76), while the Manufacturing Industry sector remains non-basic (LQ 0.64) despite its large nominal value; these values are consistent with the results of independent calculations by other studies using slightly different data ranges (2017-2021), strengthening the reliability of the findings. In conclusion, the structure of the Surabaya economy in the 2016-2021 period is dominated by the services and trade sectors as the basis for growth, amidst a gradual downward trend in their share of the GRDP of East Java Province, which is in line with the theory of industrial agglomeration-deglomeration to metropolitan buffer areas.

Keywords: economic structure, base sector, Location Quotient, share

of GRDP, Surabaya City