The success of sustainable economic development is seen to be enhanced by economic growth. Numerous studies have looked at the connection between economic growth and development, but the findings are still contradictory. The purpose of this research is to investigate the elements of agglomeration externalities that contribute to quality of economic growth. The agglomeration externalities namely specialization versus diversification. A mathematical quantitative approach was employed in this study using Marshallian and Jacobian Index while quality of growth measured by 6 dimensions. Quadrant method applied to analyze the relationship between the variables. The empirical evidence in Sumatera Islands showed that specialization policy has a higher positive impact to quality of economic growth than those from diversification policy. Thus, the implication in this study suggested that local government would be better off by focusing on certain sector rather than diversifying production.