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ABSTRACT: Since the implementation of decentralization policy in Indonesia, many local governments
have been trying to carry out local economic development in order to encourage the growth of local
economic activities and create new jobs. One strategy that can be applied is to strengthen the linkages
among economic activities in a region. The linkage is expected to boost and stimulate the growth of
economic sectors which are well capable of creating employment opportunities. In addition, the role of
rural non-farm economy in the economic development in developing countries becomes important.
Since the rural population and workforce will continue to grow while growth of the agricultural land area
does not increase, the absorption of labor in the agricultural sector becomes unproductive. Local
economic development which focuses on rural-resourcebased SMEs (small medium enterprises) and
relates to activities in urban areas is potential to provide employment for rural residents. Tapioca agro-
industry cluster located in Pati Regency as one of the local resource-based SMEs in rural areas and urban-
linked activities is expected to provide employment in rural areas. This study attempts to examine the
contribution of tapioca agro-industry cluster in local economic development in Pati Regency. Using
primary data gained by survey at agro-industry household, this study describes the linkages of tapioca
agro-industry activities with other economic activities in Pati Regency. The linkage can arise through
backward production linkage, forward production linkage and consumption linkage. The result shows
that this agro-industry has strong backward production linkages, forward production linkages and
consumption linkages with trade and service activities at local level; but rather weak with agriculture and
industry activities. Therefore, local government should have policy to strengthen these linkages at local
level so that it can generate a greater value added in the local economy of Pati Regency and expand job
opportunities for local community.