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 Input- Output 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

more »

... 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.