Agricultural Sector as a Driver of Regional Economic Growth: Evidence from GRDP and Location Quotient Analysis in Langkat Regency, Indonesia (2019–2023)

Abstract

This study investigates the contribution of the agricultural sector to regional economic growth in Langkat Regency, Indonesia, during the period 2019 to 2023—a timeframe marked by regional decentralization reforms and post-pandemic economic adjustments. The study tests the hypothesis that agriculture functions as both a base sector and a key driver of economic performance at the sub-national level. A dual-method approach is employed, integrating Location Quotient (LQ) analysis to determine sectoral specialization and multiple linear regression to quantify the economic significance of core agricultural indicators—harvested area and crop production volume. Results show that the agricultural sector consistently served as a base sector over the study period, with an average LQ of 1.7516, affirming its structural dominance. Regression findings reveal that a one trillion IDR increase in agricultural output is associated with a 1.832 trillion IDR rise in GRDP, with the model explaining 97.8% of the variance in economic growth. These results underscore the pivotal role of agriculture in regional development. The study recommends targeted policies for agricultural modernization, infrastructure investment, and risk mitigation strategies to ensure sustainable and inclusive growth. This research contributes to regional development literature by offering spatially grounded, empirical evidence for policy formulation in agrarian economies.