Analysis Impact of the Agricultural Industry on Economic Growth in Aceh Province

The agricultural sector plays a pivotal role in the economy of Aceh Province, yet the contribution of the agricultural industry to economic growth remains suboptimal, as evidenced by the low proportion of legally registered agricultural industries (1.62% of the national total) and fluctuations in the growth of the agricultural industry’s Gross Regional Domestic Product (GRDP). This study aims to analyze the impact of the agricultural industry on the economic growth of Aceh Province. A quantitative approach was employed, utilizing a simultaneous equation model and the Two-Stage Least Squares (2SLS) method. Secondary time-series data spanning 20 years (2004–2023) were used, including variables such as Aceh’s GRDP, agricultural sector labor absorption, agricultural industry GRDP, agricultural sector investment, Farmers’ Terms of Trade (FTT), and agricultural exports. The results indicate that Aceh’s economic growth is significantly influenced by labor absorption, agricultural industry GRDP, investment, FTT, and exports, with a strong multiplier effect from the agroindustry sector.