A FUZZY MADM METHOD FOR KEY SECTOR IDENTIFICATION: THE CASE OF INDONESIA

Abstract

Conventionally, the identification of a key sector of an economy is always associated with the measurement of the intersectoral linkages, in which a key sector is defined as a sector that provides an above-average contribution in inducing the whole economy to grow. Unfortunately, the existing methods for key sector identification have also some conceptual limitations. Due to the limitations inherent in existing methods, an altern ative approach, providing more realistic, appropriate meaning and broader perspectives in interpreting the notion of a key sector, is desirable. The main objective of this work is to provide methodological improvements over previous works in examining the key sectors of an economy, by proposing an alternative approach involving the application of fuzzy set theory in the field of multi-criteria decision making. The modeling of the key sector identification problem as a fuzzy-MADM problem enables the consideration of other relevant criteria. The application of fuzzy sets theory makes possible the assessment of qualitative and imprecise information, which is very often found but is difficult to solve in real life decision making problems. When applying data to Indonesia, the new approach has successfully identified key sectors the Indonesian economy which vary over time under study