Sectoral Economic Potential Analysis for Regional Development across Regencies in the Lake Toba Area, Indonesia

Abstract

Lake Toba has been designated as a National Tourism Destination and is targeted for tourism-led, sustainable regional development; however, rising tourist arrivals do not automatically generate broad-based income gains when regional economies remain dominated by low–value-added activities and weak inter-sector linkages. This study diagnoses sectoral economic potential across eight Lake Toba regencies (Toba, Simalungun, Samosir, North Tapanuli, Humbang Hasundutan, Karo, Dairi, and Pakpak Bharat) using constant-price GRDP time-series data for 2015–2024. Three complementary tools are applied: Location Quotient (LQ) to identify basic sectors and specialization, Shift–Share to decompose growth and assess local competitiveness, and Klassen Typology to classify sectors by relative growth and contribution. Results are integrated using an overlay rule to prioritize sectors that simultaneously show specialization (LQ > 1), progressive/competitive dynamics, and “advanced and fast-growing” characteristics. Findings indicate that Agriculture, Forestry and Fisheries and Government Administration remain consistently basic across the regencies, while Accommodation and Food Services emerges as a key basic and fast-growing sector in multiple regencies, reflecting the expanding role of tourism services. The overlay highlights differentiated priority sectors by regency, including agriculture (Simalungun, Pakpak Bharat), electricity and gas (Pakpak Bharat), construction (Toba, North Tapanuli, Humbang Hasundutan), transport and warehousing (North Tapanuli, Karo), accommodation and food services (Samosir, Karo, Pakpak Bharat), and education and health services (Karo). Policy implications emphasize value-chain upgrading and local procurement to reduce leakages, connectivity and utility investments to unlock private-sector competitiveness, and cross-regency coordination to align complementary specialization roles for inclusive and sustainable growth.