III. RESEARCH METHODS 3.1 Research Locatio Riau Provice becomes the mai area i this research o the role of pulp ad paper idustry. The decisio o Riau Provice was supported by several facts: 1. The largest pulp ad paper compaies are located i Riau Provice, such as PT. IKPP ad PT. RAPP. 2. Riau Provice provides abudace atural resources for pulp ad paper idustry ad has potetial for the developmet of the idustry. 3. Expectatio o Riau Provice social ecoomy coditio towards large scales compaies. 3.2 Type ad Source of Data The type of data used i this study is secodary data, amely Table of Iput- Output o domestic trasactio based o producer price i Riau Provice 2010 from classificatio from 112 sectors, published by Ceter of Study o the Dyamics of Developmet System (PKDSP), Brawijaya Uiversity, Malag ad Bappeda of Riau Provice, which will be aggregated ito 22 sectors by the writer usig Microsoft Excel 2011. After beig aggregated, the likage, dispersio effect ad multiplier are calculated usig Iput-Output Aalysis for Practitioers (IOAP) 1.0.1. Literature studies usig jourals ad articles ad other relevat data also used i this research. Iput-Output Table of Riau Provice 2010 is chose because it is the most updated data available durig this study.
37 3.3 Method Aalysis Method aalyses used i this research are descriptive aalysis ad Iput- Output aalysis. The descriptive aalysis used to explai the cotributio of pulp ad paper idustry i term of demad, output, gross value added, ivestmet, ad export-import. The Iput-Output aalysis used to kow the likage, dispersio ad multiplier to defie whether or ot pulp ad paper idustry is oe of the key sectors. 3.3.1 Itermediate Iput Coefficiet Itermediate iput coefficiet is applied to idetify the most domiat iput compoets (itermediate iput ad primary iput), the role of raw materials ad eergy usage, level of bakig services, trasportatio ad other iputs. The proportio of itermediate iput used i sector i towards total iput of sector j is called itermediate iput coefficiet. Itermediate iput coefficiet ca be arraged ito matrix A with structure as follow: A = a 11 a 12 a 21 a 22 a 31 a 32 a a a.. (3. 1) Primary iput coefficiet shows the role ad compositio of wages & salary, busiess surplus, shrikage, idirect tax ad subsidy. Primary coefficiet iput described as follow: αv j = V j X j (3. 2) where: X j : total iput i sector j (for sector i is Xi) V j : primary iput (added value) i sector j αv j : primary coefficiet iput
38 3.3.2 Likage Aalysis Strog, comprehesive ad sustaiable ecoomic itegratio betwee ecoomy sectors is the key success for ecoomic developmet. Therefore, likage betwee sectors is eeded to achieve developmet success. Likage aalysis is a cocept used as the basis for formulatig ecoomic developmet strategy by idetifyig the likage betwee sectors withi a ecoomy system (Priyarsoo, 2007). Likage aalysis cosists of forward likage, describig the likage betwee sectors i sale agaist total sale of the output produced; ad backward likage, describig the likage betwee sectors i purchasig agaist total purchasig of iput used i productio process. Forward ad backward likage ca be direct likage, where the effect will impact the sector directly; or direct ad idirect likages. Direct likage was show by techical coefficiet, while direct ad idirect likages show by Leotief Iverse Matrix. 1. Direct Forward Likage Direct likage explaied the effect of a particular sector to the sectors that use most of the output directly per uit icrease i total demad. Direct forward likage is defied as follows: F(d) i = a ij j!1.. (3. 3) Where: F(d) i α ij : direct forward likage : techical coefficiet matrix
39 2. Direct-Idirect Forward Likages Show the result of a particular sector to the sectors that use most of the sector output both directly ad idirectly per uit icrease i total demad. F(d + i) i = j!1 β ij.. (3. 4) Where: F(d+i) i : direct ad idirect Forward Likage β ij : Leotif iverse matrix 3. Direct Backward Likage Direct Backward Likage describig the direct effect from certai sector to other sectors, which provide partial itermediate iput for those sectors, agaist icrease i uit of total demad. B(d) j = a ij i!1 (3. 5) Where: B(d) j α ij : direct backward likage : techical coefficiet matrix 4. Direct-Idirect Backward Likages Direct-Idirect Backward Likages describig the direct-idirect effect from certai sector to other sectors, who provide partial itermediate iput for those sectors, agaist icrease i uit of total demad. B(d + i) j = β ij i!1. (3. 6)
40 Where: B(d+i) j : direct ad idirect backward likage β ij : reverse Leotief matrix model 3.3.3 Dispersio Effect Aalysis The dispersio effect aalysis is the developmet from direct backwardforward aalysis, by comparig direct ad idirect likage multiplies by umber of sector with total direct idirect likages values from all sectors. The likage aalysis which has bee described above caot be compared across sectors because of the role of demad of each sector is ot the same. So we eed to compare the average impact of the sector with a average impact across all sectors. 1. Coefficiet of Dispersio This aalysis is describig the effect caused by some uits of ed demad for all sectors i oe ecoomy. Coefficiet of Dispersio also called backward dispersio. PD j = i!1 β ij i!1 j!1 β ij.. (3. 7) Where: PD j α ij : coefficiet of dispersio sector j : Leotief iverse matrix model 2. Sesitivity of Dispersio Sesitivity of Dispersio is a descriptio of the effect caused by a uit of fial demad for all sectors i the ecoomy. Sesitivity of dispersio is a direct likage or idirect forward likage.
41 Where: SD i = j!1 β ij i!1 j!1 β ij.. (3. 8) SD j α ij : sesitivity of dispersio sector i : Leotief iverse matrix model 3.3.4 Multiplier Effect Aalysis Multiplier value is used to calculate the effect caused by icrease ad decrease variable of certai sector to other sectors. Based o Iput-Output multiplier aalysis, push-factor for ecoomic chages (reveues & workforce) geerally assumed as icrease i sale i oe uit of currecy agaist fial demad of certai sector. Therefore, multiplier aalysis is divided ito three categories: output multiplier, icome multiplier ad labor multiplier. Each multiplier is divided ito two types: type I ad type II. Type I aalysis is a ope model, where household factor become exogeous factor. While type II aalysis is closed model, where household factor become edogeous factor. There are two multiplier effects will be calculated i this study, which are: Value Table 3.1 Output Multiplier ad Icome Multiplier Multiplier Output Icome Iitial Effect 1 h i First Roud Effect i a ij i a ij h i Idustrial Support Effect i α ij -1- i a ij i α ij h i - h i - i a ij h i Cosumptio-Iduced effect i α* ij - i α ij i α* ij h i - i α ij h i Total Effect i α* ij i α* ij h i Flow-o Effect i α* ij 1 i α* ij h i - h i Source: Daryato. 2010
42 Where: a ij h i α ij : output coefficiet : household icome coefficiet : ope reverse Leotief matrix α* ij : closed reverse Leotief matrix 1. Output Multiplier Output multiplier determies multiplicatio level of regioal output chages caused by chages i ed demad of certai sector. Meaig, the total output value created by a ecoomy due to chages i oe uit currecy of ed demad of certai sector. a) Iitial Impact Iitial impact refers to the assumptio that whe fial demad icrease, regardless of which compoet is icreased, geerally leads to a icrease i govermet spedig or export earigs. The iitial impact of all idustrial output is cosidered to have the same value, amely oe. b) First Roud Effect Shows the magitude of direct effects o total output of all sectors due to a icrease i fial demad of a sector i moetary uits. c) Idustrial Support Effect Shows the magitude of idirect effects o total output of all sectors due to a icrease i fial demad of a sector i moetary uits.
43 d) Cosumptio-Iduced Effect Shows the magitude of the impact o household icome due to chages i demad for fial output. e) Total Effect Total effect is the total sum of all the effects: the iitial impact, the direct effect (the first roud effects), the idirect effect (the idustrial support effects), ad the iductio effect of cosumptio. f) Elasticity Percetage of the total impact that ca provide a clearer picture of the respose give by a sector of the ecoomy as a whole whe demad fially turs for a moetary uit. g) Type I Output multiplier Type I place the household as exogeous variables i which the household is cosidered able to determie the cosumptio outside the existig ecoomic system, but o the other had ca also be assumed that households do ot act as exogeous because their icome is depedet o the ecoomic developmet of a regio. Type I multiplier value is obtaied from a ope I-O model. Iitial Effect + First Roud Effect + Idustrial Effect Type I = Iitial Effect h) Type II Output multiplier Type II is applied to aalyze the cosumptio of households workig i a sector to all sectors of ecoomic output. Output multiplier Type II place the household as edogeous variables i which the household is cosidered able to determie the
44 cosumptio iside the existig ecoomic system. Output multiplier Type II is obtaied from closed I-O model. Type II = Iitial Effect + First Roud + Idustrial Support + Cosumptio Iduced Iitial Effect 2. Icome Multiplier Icome multiplier measures icome total icrease of all sectors caused by output chages of a sector i the ecoomy. a) Iitial Impact Shows the iitial impact, i this case simulated that a moetary uit icrease i fial demad of a sector b) First Roud Effect Shows the magitude of direct effects o total icome of all sectors due to a icrease i fial demad of a sector i moetary uits. c) Idustrial Support Effect Shows the magitude of idirect effects o total icome of all sectors due to a icrease i fial demad of a sector i moetary uits. d) Cosumptio-Iduced Effect Shows the magitude of impact is defied as the cosumptio-iduced impacts o household icome icreased due to icreased demad for fial output. e) Total Effect Total effect is the total sum of all the effects: the iitial impact, the direct effect (the first roud effects), the idirect effect (the idustrial support effects), ad cosumptio-iduced effect.
45 f) Elasticity Percetage of the total impact that ca provide a clearer picture of the respose give by a sector of the ecoomy as a whole whe demad fially turs for a moetary uit g) Type I Icome multiplier Type I is used to aalyze total reveue chages caused by fial demad, directly or idirectly i the ecoomy of a regio. Icome multiplier Type I place the household as exogeous variables i which the household is cosidered able to determie the cosumptio outside the existig ecoomic system, but o the other had ca also be assumed that households do ot act as exogeous because their icome is depedet o the ecoomic developmet of a regio. Type I multiplier value is obtaied from a ope I-O model. Type I = Iitial Effect + First Roud Effect + Idustrial Support Effect Iitial Effect h) Type II Icome multiplier Type II place the household as edogeous variables i which the household is cosidered able to determie the cosumptio iside the existig ecoomic system ad obtaied from closed I-O model. I icome multiplier Type II, the impact that occurred o the ecoomic sectors are ot oly caused by direct ad idirect effect, but also due to the chagig of cosumptio ad household icome. It ca be see if the output of various sectors of the ecoomy icreases, it will icrease the wages ad workig hours. with wage icreases due to additioal hours of work, it will icrease
46 household icome ad household demad for goods ad services will also icrease which the causes the output of ecoomic sectors is also icreasig. Type II = Iitial Efect + First Roud + Idustrial Support + Cosumptio Iduced Iitial Effect 3.3.5 Key Sectors Aalysis Multiplier values of Type I ad Type II obtaied from the aalysis of output ad icome will be used i determiig the priority sectors through TOM (Total Output Multiplier) ad TIM (Total Icome Multiplier). TOM is obtaied by totalize the output multiplier value Type I ad output multiplier Type II while TIM is obtaied by totalize the icome multiplier Type I ad icome multiplier Type II. Results obtaied from the TOM ad TIM will determie the priority sector. Sector with the highest values of TOM ad TIM is the highest priority sector while the sector with the lowest value is the lowest priority sector. 3.4 Cocepts ad Operatioal Defiitios of Data 3.4.1 Output Output is all value of productio of goods ad services (sales receipts) geerated by all sectors of the ecoomy i a coutry or regio. 3.4.2 Itermediate Iput Itermediate iput icludes the use of various goods ad services by a sector i productio activities. Goods ad services ca be derived from the productio of other sectors, as well as its ow productio. These items are usually fiished i the iput of sigle-use, such as raw materials.
47 3.4.3 Primary Iput Primary iput or value-added goods ad services are created or give to the productio factors that play a role i the productio process. Remueratio icludes wages ad salaries, busiess surplus, depreciatio ad idirect taxes. Wages ad salaries are frige beefits to employees, either i moey or goods, icludig all allowaces while surplus busiess is the form of a compay's gross profit before the distributio to shareholders ad the corporatio, ad also before taxes. Depreciatio is the value of corporate profits discrepacy for the accumulatio of capital goods that wears out, while idirect taxes are taxes levied agaist ay govermet sales trasactios made by compaies. 3.4.4 Itermediate Demad Itermediate demad is the demad for goods ad services used for further productio process. This suggests that the demad of a request for iput by the sector to other sectors for further processig. 3.4.5 Fial Demad Icludes household cosumptio expediture, govermet cosumptio expediture, fixed capital formatio, stock chage, exports ad imports. Household expediture icludes the purchase of goods ad services by households, both for food ad o- food. Purchase of the residece caot be put i household spedig due to be cosidered as capital formatio i buildig retal sector. Govermet cosumptio expediture icludes all purchases of goods ad services by govermet routie, icludig paymet of salaries, ad developmet expeditures for the procuremet of facilities ad various other capital goods.
48 1. Household Cosumptio Expediture Household cosumptio expediture cosist of purchases for the cosumptio eeds have bee both i the coutry ad overseas for goods ad the laguage is doe by households or etities that are ot for profit, which is the reduced by the et value of sales of used goods ad goods the rest. Purchases of goods such as real estate ivestmets are ot couted as cosumptio spedig, but of a fixed capital formatio. 2. Govermet Cosumptio Expediture Govermet cosumptio expediture, iclude the expeses of cetral ad local govermet for cosumptio, except the capital formatio icludig expediture for armed forces. 3. Gross Fixed Capital Formatio Gross fixed capital formatio iclude the procuremet, maufacture ad purchase of ew capital goods, both domestic ad abroad, ad used capital goods from abroad by ecoomic sectors. The method used i the estimatio of the umber of fixed capital formatio is approach flow of goods, amely the approach through the provisio of capital goods both from withi ad outside the coutry. 4. Stock Chage Stock chage is the differece betwee the values of ivetory at the ed of the year with the value of ivetory at the begiig of the year. I Iput-Output Table, stock chage data derived from the recociliatio process, which is the differece betwee the allocatios of output by the umber of providers.
49 5. Export ad Import Export ad import are trasactio of goods ad services betwee residets of a area with a populatio outside the regio, both other provices ad abroad. Export trasactios of goods abroad covers all trasportatio costs i the exportig coutry, export duties ad the cost of loadig, which is idicated by the value of free o board (f.o.b). As for the import of foreig trasactios is expressed o the basis of laded cost, which cosists of the cost, isurace ad freight (c.i.f) plus the import duty ad sales tax o imports.