From Resource-Based Economy to Economic Diversification: Structural Transformation and Sectoral Dynamics in Riau Province

Riau Province's economy has long rested on resource extraction, but whether it is genuinely transforming into something more diversified remains an open question. This study examines regional economic development and structural transformation in Riau by identifying leading sectors, assessing sectoral growth, and tracing the shift from a resource-based economy toward a more diversified, value-added structure. Using secondary data on Gross Regional Domestic Product by industry for Riau and Indonesia over 2015–2025, the analysis combines Location Quotient (LQ) to identify economic base sectors, Dynamic Location Quotient (DLQ) to gauge their future prospects, and structural change analysis to compare Riau's sectoral trajectory against the national economy, interpreted through the lens of economic complexity and related variety. The results show that Riau's economic base still rests on Agriculture, Forestry, and Fisheries; Mining and Quarrying; and Manufacturing, though these sectors are heading in different directions. Agriculture and Manufacturing stand out as both leading and prospective, with LQ and DLQ values above one, while Mining and Quarrying remains dominant but is visibly losing relative competitiveness. Structural change analysis further shows Agriculture and Manufacturing growing faster than their national counterparts, pointing toward higher value-added activity. Rather than abandoning resource-based sectors, Riau's transformation appears to run through strengthening linkages between agriculture, manufacturing, trade, and services, with downstream industrialization as the path to more diversified, resilient growth.