Key findings:

The agricultural sector in Indonesia has a relatively low output multiplier (1.2854) compared to other sectors, but it holds the third-largest income multiplier (0.3984). Despite its limited GDP contribution, the sector remains significant in terms of income generation, particularly in comparison to non-agricultural sectors.

What is known and what is new?

The agricultural sector in Indonesia is known to contribute to GDP and play a vital role in the economy, though its impact on output has been relatively modest. This study reveals new insights, showing that while the agricultural sector has a low output multiplier (1.2854), it holds a significant income multiplier (0.3984). This highlights the sector's crucial role in income generation, emphasizing its importance within the broader Indonesian economy despite its smaller output contribution compared to other sectors.

What is the implication, and what should change now?

The implication is that the agricultural sector, despite its lower output contribution, plays a crucial role in income generation in Indonesia. To maximize its potential, policymakers should focus on improving infrastructure, technology adoption, and providing financial support to enhance productivity and efficiency. Additionally, integrating agribusiness with other high-multiplier sectors can further amplify its economic impact.

The national goal is as stated in the fourth paragraph of the opening of the 1945 Constitution which reads "to carry out world order based on freedom, eternal peace, and social justice". The Government of the Republic of Indonesia protects the entire Indonesian nation, promotes public welfare, and educates the nation's life. To achieve the national goal, development is carried out in all aspects of life, including the development of the agricultural sector. As is known in the third paragraph it reads "to educate the life of the nation". To educate the nation, food availability is needed to support the life of the Indonesian people. As is known that Indonesia is an agricultural country. Therefore, we need a regional development plan [1].

Development is a system that is deliberately continued regularly to a higher level. As a result, progress is made in every sector, sector, and sub-sector in a planned and programmed manner. Therefore, economic development is the type of growth that dominates the country's economic sectors. When a sector grows, it inevitably drives the growth of other industries. The sectors will be interrelated. Along with economic growth, the relationship between these sectors can be strengthened [2]. Economic development is an effort or process to bring about positive change with the aim of making society more prosperous. A country's economic development is said to be successful if the country can achieve high economic growth or a significant increase in output.

The role of the agricultural sector is strategic in national development, namely providing food for the people of Indonesia, earning foreign exchange through exports, supplying industrial raw materials, increasing employment and business opportunities, increasing regional income, poverty alleviation, and driving the economic sector. The agricultural sector is still facing many problems to date. Problems in the agricultural sector such as the increasingly narrow area of ​​agricultural land caused by residential and commercial areas and an ever-increasing population greatly affect food supply difficulties, especially food supplies, and livelihoods. In addition, the next problem in the agricultural sector is that many farmers are elderly, farmers' income is low and there is a lot of competition for agricultural products. Agricultural problems are very complex because they are related to the life of society today and in the future. Therefore, the management and utilization of these agricultural products must be planned and utilized optimally so that they can be enjoyed by the entire population of Indonesia. However, even though the agricultural sector has various kinds of problems, the agricultural sector can still contribute to GDP even if only a little.

Gross Domestic Product is one measure of national income for a country's economy in a certain period (usually one year). National income affects foreign exchange reserves through the mechanism of international trade. Based on research (Dianita et.,2018) [3], short-term growth in Gross Domestic Product shows the value of foreign exchange reserves, while long-term growth in Gross Domestic Product has a significant positive impact on foreign exchange reserves. The prosperity of a country can be estimated by calculating the Gross Domestic Product (GDP) and dividing it by the total population. Both can be determined by calculating the GDP of a country and the level of social productivity. for social productivity and GDP per person. Based on the research results of Mankiw (2007) [4], Gross Domestic Product (GDP) is a country's total income and expenditure on goods and services. Gross Domestic Product is often considered the best measure of economic output. GDP figures summarize a country's economic activity in units of currency for a given period.

The input-output analysis method created by Professor Wassily Leontief is one way to identify the Indonesian economic sectors that have the greatest influence on the Indonesian economy. Input-output analysis is a general balance analysis. This analysis is not based on theories, but on current economic conditions. This research is also used to evaluate the relationship between various sectors of the economy. The purpose of this study is to analyze how big the output multiplier of the agricultural sector and other economic sectors (8 sectors) is in the Indonesian economy and to analyze the income multiplier of the agricultural sector and other economic sectors (8 sectors) in the Indonesian economy based on the Indonesian Input-Output Table 2016. The data used is Indonesia's Input-Output Table data for Domestic Transactions based on Producer Prices (17 Business Fields), this data is the most recent Input-Output Table data published by BPS Indonesia for 2021. Of the 17 sectors or business fields used in this study, it focuses on 9 sectors that are directly related to the agricultural sector from the perspective of agribusiness as a system. This research focuses on agriculture in the agribusiness approach as a system in the study of a macroeconomic perspective.

This research is quantitative research based on secondary data from BPS. The type of data used in this study is secondary data, namely data that has been collected by data collection agencies and has been published by the Central Bureau of Statistics (BPS). The secondary data used is the Indonesian Input-Output Table of Domestic Transactions Based on Producer Prices (17 Business Fields) in 2016. Of the 17 sectors used or discussed in this study 9 sectors are directly related to the agricultural sector from the perspective of agribusiness as a system, because this research focuses on the agricultural sector, especially from an agribusiness perspective. 

Input-output analysis is a broad analysis of the economy of a region or country because it examines the interrelationships between economic sectors in the region. Therefore, when production levels change in certain sectors, we can see the impact on other sectors. This analysis is also related to the level of community welfare in a region through primary input (value added). That is, we can see how much the people's welfare increases or decreases at the end of changes in the level of production in these sectors. The Input-Output table and its analysis were first introduced by Professor Wassily Leontief in the late 1930s but only became known in 1951. For his work, Professor Wassily Leontief won the Nobel Prize in Economics in 1973 [5].

The output multiplier is to determine the impact of changes in the final demand of a sector on all sectors in each unit of change in the type of multiplier. To find out the value of the output multiplier, first, calculate the matrix A to calculate the inverse matrix Leontief (. The output multiplier number is the number of columns of the elements of Leontief's inverse matrix.

The formula is as follows:

Oj =

Information:

Oj: The output multiplier number of sector j

∝ij : Elements of Leontief's inverse matrix (.

The income multiplier figure is an increase in income due to changes in production in the economy. In the Input-Output Table, income is defined as the wages and salaries received by a household and includes dividends and bank interest. The household income multiplier is a sector that shows changes in the level of household income resulting from additional units of final demand in that sector.

To calculate the income multiplier, you must first calculate the ratio. To find the ratio, namely by dividing wages by total input (wages: total output). After the value of the ratio is known, the next step is to multiply the ratio with Leontief's inverse matrix. A sector is said to have a high role in attracting people's income if the community's income index is> 1.
 

The formula is as follows:

Hj =

Information:

Hj: Sector income multiplier number j

∝ij : Leontief inverse matrix element

ɑan + 1 j: Ratio between wage/income divided by total input

1. Multiplier Output Analysis

Table 1. Output Multiplier Calculation Results

Source: Processed Secondary Data (2022)

Based on the concept of agribusiness as a system, other economic sectors that are directly related to the agricultural sector consist of nine sectors, namely the agricultural sector, Processing industry sector; sector of water Procurement, waste management, waste, and recycling; wholesale and retail trade sector; the transportation and warehousing sector, the accommodation and food and drink provision sector; information and communication sector; financial services and insurance sector; and the corporate service sector. The agribusiness function consists of procurement and distribution of production facilities, primary production activities (cultivation), processing (agro-industry), and marketing. These functions are then arranged into a system, where these functions become subsystems of the agribusiness system. Based on research results John H. Davis dan Ray A. Goldberg (1957) [6], “Agribusiness is the sum total of all operations involved in the manufacture and distribution of farm supplies; production operations on the farm; and the storage, processing, and distribution of farm commodities and items made from them”.

The largest output multiplier value of the nine sectors that are directly related to the agricultural sector in the perspective of agribusiness as a system is the transportation and warehousing sector 1.7852. This means that the impact is very large in encouraging increased output to achieve economic growth. For example, in transporting agricultural products such as soy milk, people who want to buy soy milk without leaving the house are using online motorcycle taxi services which make it easier to deliver soy milk products to consumers. Through this transportation service, it can make it easier for consumers without having to come to a store or place that sells the desired product. Especially when the Covid-19 outbreak yesterday prohibited crowds and people had to keep their distance, the choice to use online transportation services and online expeditions was the best alternative for getting the desired item or product. This is in line with research results Kuswati (2019) [7], the need for transportation is a great need in economic activity to facilitate the distribution of goods from one region to another more quickly.

The agriculture, forestry, and fisheries sectors are included in the lowest output multiplier value compared to other sectors, namely 1.2854. This means that the agricultural, forestry, and fisheries sectors have a low ability to stimulate and encourage output growth in the Indonesian economy. This is due to the limited facilities and infrastructure in the agricultural sector, the tools used by farmers in cultivating their agriculture are still simple so the results are not optimal and a large number of farmers are old so the effect on agricultural output is less than optimal. This is in line with the results of research from [8] which is also aligned, namely the output from the agricultural sector is a large part of the input to the industrial sector. Consequently, the agricultural sector contributed to the growth of industrialization. If the output of the industrial sector increases, then the output of the agricultural sector will also increase indirectly. The same is true for other industries that rely on the output of the agricultural sector as a production input. This forms the relationship between economic sectors which affects the economy's output, income, and employment, which is known as the multiplier effect. An example of the output multiplier of the agricultural sector from an agribusiness perspective is, with the agricultural, forestry, and fisheries sectors, there will be stalls and restaurants selling various foods and beverages, there will be agro-tourism attractions which will later affect lodging places around agro-tourism sites. and will affect the manufacturing industry sector which processes products with raw materials from the agricultural sector so that it can add output value to the Indonesian economy.

there is an increase in the final demand for one unit of money or Rp. 1 million on average will encourage an increase in production resulting in the formation of new output in the Indonesian economy of Rp. 1,579,800. The output multiplier value which is more than the average value is in the processing industry sector at 1.7389; the sector of water Procurement, waste management, waste and recycling at 1.6390; the transportation and warehousing sector at 1.7852; accommodation and food and drink provision sector at 1.7575; and company services at 1.5961. That is, the processing industry sector; the sector of water supply, waste management, waste, and recycling; the transportation and warehousing sector; the accommodation and food supply sector; and corporate services have the highest and strongest output multiplier impact on average in boosting the Indonesian economy. Based on the research results of Nainggolan, K., Soekardono, and Hanani (2005) [9], economic growth is related to per capita output, because it takes into account two things, namely total output, Gross Domestic Product (GDP), and population. This is because the per capita output is the gross product divided by the total population.

1. Income Multiplier Analysis

An analytical approach known as income multiplier analysis is used to predict how changes in a sector's final demand will affect that sector's income in an economy. The income multiplier value of a sector shows how much additional family income is generated when one unit of final demand is added to that sector. The income effect is the name of this effect (income effect) [10]. The additional income earned by these households comes from additional labor or working hours to increase output.

Table 2. Income Multiplier Calculation Results

Source: Processed Secondary Data (2022)

The largest income multiplier value is the financial services and insurance sector of 0.4049 million Rupiah or Rp. 404,900. This means that the financial and insurance services sector has a major role in creating jobs that can increase household income. Because, with the existence of the financial services and insurance sectors, other economic sectors can develop their businesses by borrowing capital from the financial sector as capital and can insure their businesses so they can minimize losses. For example, from an agribusiness perspective, that is, households can insure their businesses such as Micro, Small, and Medium Enterprises of banana chips to minimize losses so that they can get maximum results that can increase household income. Households can also borrow capital from banks or cooperatives to build businesses to generate income.

The income multiplier value of the agricultural, forestry and fisheries sectors is in the third largest position, namely 0.3984 million Rupiah or Rp. 398,400. This means that the agricultural, forestry, and fisheries sectors have a major role in creating jobs for households to be able to earn income. For example, with the existence of the agricultural sector, households can process it into a product that has high added value, so that they can obtain greater income which can later increase people's welfare. a food court that serves a variety of processed foods and beverages and can establish agro-tourism attractions so that they can increase household income. Based on the results research of Sri Kurniawati (2020) [11], the agricultural sector tends to be one of the fundamental economic sectors in several provinces in Indonesia, which can be seen from its contribution to the formation of Indonesia's GDP and the formation of provincial GDP. Even though the contribution of the agricultural sector tends to decrease from 2013 to 2017, employment in this sector remains high. This shows that the agricultural sector plays a role in the economy. This condition is the basis for studying the impact of the share of the agricultural sector and agricultural employment opportunities on labor productivity in Indonesia.

The average value of the income multiplier is 0.3516. This means that there is an increase in the final demand by a unit of money or Rp. 1 million into an economy will lead to the formation of an average public income of 0.3516 million rupiahs or Rp. 351,600. The sectors that have a value above the average income multiplier are the agriculture, forestry, and fisheries sectors of 0.3984 million Rupiah or Rp. 398,400; wholesale and retail trade sector of 0.3954 Million Rupiah or Rp. 395,400; accommodation and food and drink provision sector of 0.3803 million Rupiah or Rp. 380,300; financial services and insurance sector of 0.4271 Million Rupiah or Rp. 427,100; the corporate service sector of 0.4049 Million Rupiah or Rp. 404,900. That is, the agricultural, forestry, and fisheries sectors; wholesale and retail trade sector; the accommodation and food supply sector; financial services and insurance sector; and the corporate service sector has a strong ability to stimulate and drive the entire economy quickly on average to earn income through the large employment of these sectors.

1. The output multiplier value of the agricultural, forestry and fisheries sectors is 1.2854; the output multiplier value of the processing industry sector is 1.7389; the output multiplier value of the water supply sector, waste management, waste, and recycling is 1.6390; the output multiplier value of the wholesale and retail trade sector is 1.4367; the output multiplier value of the transportation and warehousing sector is 1.7852; the output multiplier value of the sector providing accommodation and food and drink is 1.7575; the output multiplier value of the information and communication sector is 1.5903; the output multiplier value of the financial services and insurance sector is 1.3896; the output multiplier value of the company's service sector is 1.5961. Based on this output multiplier value, it can be seen that the contribution of the agricultural, forestry, and fisheries sectors in increasing Indonesia's economic output is 1.2854 million Rupiah.

    

2. The income multiplier value of the agricultural, forestry and fisheries sectors is 0.3984; the revenue multiplier value of the processing industry sector is 0.2886; the income multiplier value of the water supply, waste management, waste, and recycling sectors is 0.2849; the income multiplier value of the wholesale and retail trade sector is 0.3954; the revenue multiplier value of the transportation and warehousing sector is 0.2959; the income multiplier value of the sector providing accommodation and food and drink is 0.3803; the income multiplier value of the information and communication sector is 0.2890; the income multiplier value of the financial services and insurance sector is 0.4271; the company's service sector revenue multiplier value is 0.4049. Based on this income multiplier value, it can be seen that the contribution of the agricultural, forestry, and fisheries sectors in increasing household income which in turn can increase the Indonesian economy by 0.3984 million Rupiah.

    

Conflict of Interest:

The authors declare that they have no conflict of interest.

Funding: No funding sources 

Ethical approval: The study was approved by the Institutional Ethics Committee of UPN Veteran

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