Yozi Aulia Rahman, FEB Ekonomi Pembangunan (2022) Industrialization and Land Conversion in Indonesia. Environment and Ecology Research, 10 (6). pp. 627-634. ISSN 2331625X, 23316268

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Abstract

Along with increasing development activities and population growth, the need for land is increasing, such as for settlements, industry and facilities and infrastructure. On the other hand, the availability of land is relatively constant, causing land scarcity or excess demand. The existence of excess demand for land availability causes land use competition, which will lead to land conversion. The study aims to empirically examine the antecedents of land use change that occurred in Indonesia in the 1981-2018 period. This study aims to determine whether industry and population growth influence land conversion that occurred in Indonesia in 1981-2018. This study uses secondary data published by World Bank for the 1981-2018 period. This study analyzes the effect of population and industrial growth with medium to high technology on land conversion in Indonesia. In this study, the ECM method used was the Engle and Granger two-stage procedure method, namely by running The Engle-Granger two-stage procedure. This study applies the Error Correction Model (ECM) dynamic model. The use of dynamic models is important in economic analysis because dynamic specifications are concerned with the formation of models of an economic system related to changes in time. In ECM estimation, all variables in the study must be stationary. These conditions must be met so that the estimation results are not biased or do not show spurious regression results. The results empirically prove that the variable of industry has a significant effect in the short term on land conversion in Indonesia. Growth with medium-high technology including construction that occurred in Indonesia (INDUSTRY) was 1.64E-05 which means that an increase in industry of 1 percent will increase land conversion by 1.64E-05 percent in the short term. The novelty in this study is to use a variable ratio of agricultural land area, which is reversed mathematically to measure land conversion variables in Indonesia.

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