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This paper aims to investigate the effect of railway development on the Indonesia national economy with Input-Output analysis. The data used in this study are InputOutput data from 2000 to 2010. Input-Output data analysis generates contribution, value added, intermediate input, final input, linkage and multiple impacts of railway to other modes of transportation and national economy. The result of Input-Output data analysis concludes that railway has forward and backward linkage to various sub sectors, therefore it can become superior sub-sector to increase national economic growth. The research results find out that if there is a development or investment in the railway subsector of IDR. 1 billion, this, will, therefore, give impact to: (a) the amount of economic output will increase into IDR 1.63 billion; (b) the income of the society members will become IDR. 362,5 million; (c) will upgrade the employment opportunities into 9.5 people. Accordingly, there is a need to modify the government budget (APBN) that will focus primarily on developing railway transportation, both in goods and passengers vehicles.

The influence of railway development on the indonesian national economy: an input-output approach