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