The Role of Agriculture in the Structural Transformation of Indonesia

IFPRI Discussion Paper 1838, 2019

18 Pages Posted: 8 Jun 2019

See all articles by Samuel Morley

Samuel Morley

International Food Policy Research Institute (IFPRI)

Adam Kennedy

Independent

Angga Pradesha

A member of the CGIAR Consortium - International Food Policy Research Institute (IFPRI)

Gracia Hadiwidjaja

Economic Research Institute for ASEAN

Date Written: May 22, 2019

Abstract

Indonesia has managed to combine high rates of growth, rapid reductions in rural poverty and a significant structural transformation of its economy all at the same time without a big increase in urban manufacturing. Agriculture was a critical part of this transformation through two important channels. First, export-oriented agriculture, particularly palm oil and rubber contributed to rising foreign exchange receipts and helped make compatible rapid growth without balance of payments pressure on the macro economy. Second, through the release of workers from low productivity agriculture to more productive nonagricultural activities, structural change contributed between 25 and 50 percent of the rise in national labor productivity depending on the period. The government also played an important role in agricultural development and productivity growth. Public investments in irrigation in combination with subsidies for fertilizer and improved seeds increased agricultural productivity generating an adequate supply of food for domestic needs with less labor.

Keywords: agriculture, palm oils, rubber, commodities, agricultural productivity, irrigation, subsidies, fertilizers

Suggested Citation

Morley, Samuel and Kennedy, Adam and Pradesha, Angga and Hadiwidjaja, Gracia, The Role of Agriculture in the Structural Transformation of Indonesia (May 22, 2019). IFPRI Discussion Paper 1838, 2019, Available at SSRN: https://ssrn.com/abstract=3392387

Samuel Morley (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Adam Kennedy

Independent ( email )

Angga Pradesha

A member of the CGIAR Consortium - International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Gracia Hadiwidjaja

Economic Research Institute for ASEAN

Jakarta
Indonesia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
20
Abstract Views
294
PlumX Metrics