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Linkages and Rural Non-Farm Employment Creation: Changing Challenges and Policies in Indonesia

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  • Stein Kristiansen
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    Abstract

    Increasing problems of rural unemployment in Indonesia are at the core of this report. Numbers of unemployed increased dramatically after the 1997 economic crisis and millions of people searched to be reabsorbed in rural labour markets. Agricultural land is scarce, however, and entry barriers are often high in non-farm businesses. Access to capital and information is limited for the rural poor and uneducated people. During successful periods of economic growth in Indonesia, various linkages in factor and commodity markets were created. Any return to the state-dominated economy and substantial government interventions in markets is unrealistic, but linkages may nevertheless be manipulated for political ends like employment creation. Policy instruments may still be applicable for reducing market failures and to facilitate commercial transactions in an economy characterised by disintegration and sectoral and geographical disconnection. This paper aims to assess experiences from former linkage strategies for rural non-farm employment creation and to point at new policies suitable in various and changing economic, political and cultural contexts of Indonesia. A conclusion is that linkages and rural employment creation strategies should aim towards mobilising the variety of local natural and cultural resources and encourage horizontal communication and economic transactions between regions and peoples.

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    Bibliographic Info

    Paper provided by Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) in its series Working Papers with number 03-22.

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    Length: 53 pages
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:fao:wpaper:0322

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    Keywords: Agricultural development; Economic development; Economic growth; Indonesia; Informal sector; Nonfarm income; Off farm employment; Rural areas; Rural development; Unemployment;

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    Cited by:
    1. John Gibson & Susan Olivia, 2008. "The Effect of Infrastructure Access and Quality on Non-Farm Enterprises in Rural Indonesia," Working Papers in Economics 08/17, University of Waikato, Department of Economics.
    2. World Bank, 2008. "Policy Note : Environmental Management for a Sustainable Economic Development Strategy for Nanggroe Aceh Darussalam," World Bank Other Operational Studies 12516, The World Bank.

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