Optimizing the utilization of interregional input-output table in measuring the distribution of value-added exports in the regional value chain scheme: application to the food and beverage industry

The production process of an industry is no longer within a single area but comprises a synergy of multiple countries, a phenomenon measured by the Global Value Chain (GVC). The GVC enables the assessment of the distribution of value-added across various industries in different countries at a macro level with a focus on those with unimplemented regional-scale assessments (Regional Value Chain/RVC). The importance of RVC, particularly in supporting and strengthening GVC, can be emphasized using the Interregional Input-Output Table (IRIO). The RVC approach is used to understand the distribution of value-added generated by the industrial sector in Indonesia. Therefore, this study examines the relationship between the food and beverage industry in Indonesia's mainstay industry for export activities. By looking backward and forward participation using the 2016 Indonesian IRIO Table, it's possible to trace the origin and destination of value-added in the food and beverage industry across different regions. The results show that provinces with high export Foreign Value-Added (FVA) also have significant Domestic Value-Added (DVA). The food and beverage industry is instrumental in creating value-added in these provinces due to the dominant role in backward and forward participation. Furthermore, two provinces, Jawa Timur and Sulawesi Selatan, are the central hubs for the food and beverage industry in the Western and Eastern Regions of Indonesia, respectively.