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Transforming Indonesia: Structural Change from a Regional Perspective, 1968–2010

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Agricultural Development in the World Periphery

Part of the book series: Palgrave Studies in Economic History ((PEHS))

Abstract

Since 1968, Indonesia has been among the few developing countries able to sustain per capita income growth over 5 per cent. However, poverty and surplus labour are still the main features of the economy. Chapter 11 asks to what extent the dual nature of growth has stimulated structural change—or has it just rewarded a particular sector or region? We find that the emblematic State support to agriculture has not tapped the potential growth in labour reallocation. Despite the income diversification within and outside agriculture, the linkages between sectors and regions remain weak. In order to catch up, the integration of the outer regions into the economy must still take place in agriculture, investment in human capital, infrastructure, social policies and local capabilities.

Andrés Palacio acknowledges financial support from: The Marianne and Marcus Wallenberg Foundation.

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Notes

  1. 1.

    The poverty estimates must be treated with caution because of the data limitations of the World Bank dataset.

  2. 2.

    By agriculture we mean farming, livestock, forestry, fishery and agro-business that processes and transports the output.

  3. 3.

    Sumatra (Aceh, Sumatera Utara, Sumatera Barat, Riau, Jambi, Sumatera Selatan, Bengkulu, and Lampung); Java (DKI Jakarta, Jawa Barat, Jawa Tengah, DI Yogyakarta, Jawa Timur and Bali ) Kalimantan (Barat, Tengah, Selatan and Timur); Sulawesi (Utara, Tengah, Selatan and Tenggara); Eastern outer islands (Nusa Tenggara Barat, Nusa Tenggara Timur, Maluku and Papua).

  4. 4.

    By industry we mean mining, manufacturing, construction and public utilities.

  5. 5.

    Palm oil is to provide on average 350 jobs per 1000 ha and rubber 420 (Rising Global Interest in Farmland: can it yield sustainable and equitable benefits?).

  6. 6.

    We recognise the limitations of the data sources listed here. First, there are no reliable time series data on working hours in the labour data. Second, the data cannot be disaggregated by sources of income. We used household declaration of principal source of income and shares of income from agricultural censuses. Third, the sectoral data from GGDC does not capture the informal sector.

  7. 7.

    Agriculture 0.53%, mining 0%, manufacturing 0.23%, public utilities 0.02%, construction 0.08%, wholesale, retail and trade 0.35%, transport and communications, 0.15%, financial services 0% and personal and community services 0.13%.

  8. 8.

    Fuglie (2012) estimated agricultural TFP for Indonesia to have grown by a factor of 3.6 between 1991–2000 and 2001–2009.

  9. 9.

    Perennial crops, period 2003-2013: palm oil grew by 115%, rubber 71.7%, sugar cane 26.3% and cocoa 15.1%. Coffee fell by 18.6% (CBS, 2015).

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Authors and Affiliations

  1. Department of Economic History, Lund University, Lund, Sweden

    Tobias Axelsson & Andrés Palacio

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  1. Tobias Axelsson
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  2. Andrés Palacio
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Editors and Affiliations

  1. Department of Applied Economics and Economic History, Universidad de Zaragoza, Zaragoza, Spain

    Vicente Pinilla

  2. Department of Economics, Universidad de la República, Montevideo, Uruguay

    Henry Willebald

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Axelsson, T., Palacio, A. (2018). Transforming Indonesia: Structural Change from a Regional Perspective, 1968–2010. In: Pinilla, V., Willebald, H. (eds) Agricultural Development in the World Periphery. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-66020-2_11

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  • DOI: https://doi.org/10.1007/978-3-319-66020-2_11

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