The Role of Downstreaming the MSME Industry and the Green Economy in Supporting National Economic Growth

Abstract

The downstream program issued by the Indonesian government is not only for the mining sector, but also other sectors including micro, small and medium enterprises (MSMEs).In the midst of the potential for downstreaming, there are various challenges that are still emerging, both the impact of downstreaming on the economy which needs to be expanded, as well as challenges related to production factors, as well as regulations in terms of implementing green industry. With the implementation of this green industry, it is hoped that it can increase competitiveness with environmentally friendly production processes and results. This research was conducted with the aim of analyzing the influence of downstream policies for the MSME industry and the implementation of a green economy on national economic growth. The analysis technique used is SEM (Stuctural Equation Modeling) which is operated through the AMOS 24 application. The test results found that the economic downstream policy, apart from supporting economic growth, also provides added value and diversification of Indonesia's superior export products. The downstreaming of various commodities also supports the Green Economy in Indonesia. This industrial downstream policy is also an important foundation for advancing the Indonesian economy in making leaps in Indonesia's economic growth globally. These findings can support the next Indonesian government to continue the industrial downstream policy until Indonesia becomes a developed country.