Determinants of industrial agglomeration on the regional economy

The purpose of this study is to analyze which regions have a moderate to large level of industrial agglomeration; and analyze whether industrial agglomeration, labor force, and wage levels affect economic growth in Central Java. In this study, the analytical method used is the Hoover Balassa Index and panel data regression with 3 approaches, namely the Common Effect Model (CEM), Fixed Effects Model (FEM) and Random Effects Model (REM). The results showed that industrial agglomeration, the number of the workforce, as well as wage levels each had an influence for economic growth. This research shows the results of industrial agglomeration and labor force have no significant influence on economic growth. Meanwhile, the wage level has a significant influence on economic growth. The limitation of this research lies in the collection of industrial agglomeration data so that data processing is needed in such a way as to obtain industrial agglomeration data. It is hoped that hopefully this research serves as a consideration for the government to take policies to increase regional economic growth so that it always increases every year.