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The Effect of Infrastructure Access and Quality on Non-Farm Enterprises in Rural Indonesia

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Author Info

  • John Gibson

    ()
    (University of Waikato)

  • Susan Olivia

    (University of California, Davis)

Abstract

There is growing interest in the rural non-farm sector in developing countries as a contributor to economic growth, employment generation, livelihood diversification and poverty reduction. Access to infrastructure is identified in some studies as a factor that affects non-farm rural employment and income but less attention has been paid to the constraints imposed by poor quality infrastructure. In this paper we use data from 4000 households in rural Indonesia to show that the quality of two key types of infrastructure – roads and electricity – affects both employment in and income from non-farm enterprises. It appears that there would be gains from development strategies that improve both the access to and the quality of rural infrastructure.

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File URL: ftp://mngt.waikato.ac.nz/RePEc/wai/econwp/0817.pdf
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Bibliographic Info

Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 08/17.

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Length: 19 pages
Date of creation: 31 Dec 2008
Date of revision:
Handle: RePEc:wai:econwp:08/17

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Keywords: infrastructure; non-farm rural economy; Indonesia;

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References

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  1. Gibson, John & Rozelle, Scott, 2003. "Poverty and Access to Roads in Papua New Guinea," Economic Development and Cultural Change, University of Chicago Press, vol. 52(1), pages 159-85, October.
  2. Stein Kristiansen, 2003. "Linkages and Rural Non-Farm Employment Creation: Changing Challenges and Policies in Indonesia," Working Papers 03-22, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  3. Fan, Shenggen & Chan-Kang, Connie, 2005. "Road development, economic growth, and poverty reduction in China:," Research reports 138, International Food Policy Research Institute (IFPRI).
  4. Lanjouw, Peter, 2001. "Nonfarm Employment and Poverty in Rural El Salvador," World Development, Elsevier, vol. 29(3), pages 529-547, March.
  5. Alberto Isgut, 2004. "Non-farm Income and Employment in Rural Honduras: Assessing the Role of Locational Factors," Journal of Development Studies, Taylor & Francis Journals, vol. 40(3), pages 59-86.
  6. Priebe, Jan & Rudolf, Robert & Klasen, Stephan & Weisbrod, Julian, 2009. "Rural Income Dynamics in Post-Crisis Indonesia," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 29, Verein für Socialpolitik, Research Committee Development Economics.
  7. Berdegue, Julio A. & Ramirez, Eduardo & Reardon, Thomas & Escobar, German, 2001. "Rural Nonfarm Employment and Incomes in Chile," World Development, Elsevier, vol. 29(3), pages 411-425, March.
  8. Rioja, Felix K., 2003. "Filling potholes: macroeconomic effects of maintenance versus new investments in public infrastructure," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2281-2304, September.
  9. Jacoby, Hanan C, 2000. "Access to Markets and the Benefits of Rural Roads," Economic Journal, Royal Economic Society, vol. 110(465), pages 713-37, July.
  10. Reardon, Thomas & Berdegue, Julio & Escobar, German, 2001. "Rural Nonfarm Employment and Incomes in Latin America: Overview and Policy Implications," World Development, Elsevier, vol. 29(3), pages 395-409, March.
  11. Anne Booth, 2002. "The Changing Role Of Non-Farm Activities In Agricultural Households In Indonesia: Some Insights From The Agricultural Censuses," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(2), pages 179-200.
  12. Thomas Reardon & Kostas Stamoulis & Prabhu Pingali, 2007. "Rural nonfarm employment in developing countries in an era of globalization," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 173-183, December.
  13. Escobal, Javier, 2001. "The Determinants of Nonfarm Income Diversification in Rural Peru," World Development, Elsevier, vol. 29(3), pages 497-508, March.
  14. Lanjouw, Peter, 1999. "Rural Nonagricultural Employment and Poverty in Ecuador," Economic Development and Cultural Change, University of Chicago Press, vol. 48(1), pages 91-122, October.
  15. Van der Walle, Dominique & Cratty, Dorothyjean, 2003. "Is the emerging nonfarm market economy the route out of poverty in Vietnam?," Policy Research Working Paper Series 2950, The World Bank.
  16. Corral, Leonardo & Reardon, Thomas, 2001. "Rural Nonfarm Incomes in Nicaragua," World Development, Elsevier, vol. 29(3), pages 427-442, March.
  17. Supattra Cherdchuchai & Keijiro Otsuka, 2006. "Rural income dynamics and poverty reduction in Thai villages from 1987 to 2004," Agricultural Economics, International Association of Agricultural Economists, vol. 35(s3), pages 409-423, November.
  18. World Bank, 2008. "Spending for Development : Making the Most of Indonesia's New Opportunities," World Bank Publications, The World Bank, number 6347, October.
  19. Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas, 2009. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," Issue briefs 58, International Food Policy Research Institute (IFPRI).
  20. Reardon, Thomas, 1997. "Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa," World Development, Elsevier, vol. 25(5), pages 735-747, May.
  21. Zhu, Nong & Luo, Xubei, 2006. "Nonfarm activity and rural income inequality : a case study of two provinces in China," Policy Research Working Paper Series 3811, The World Bank.
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Citations

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Cited by:
  1. Rao, Narasimha D., 2013. "Does (better) electricity supply increase household enterprise income in India?," Energy Policy, Elsevier, vol. 57(C), pages 532-541.
  2. Shi, Hao & Huang, Shaoqing, 2014. "How Much Infrastructure Is Too Much? A New Approach and Evidence from China," World Development, Elsevier, vol. 56(C), pages 272-286.
  3. Stephan Klasen & Jan Priebe & Robert Rudolf, 2013. "Cash crop choice and income dynamics in rural areas: evidence for post-crisis Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 44(3), pages 349-364, 05.
  4. Olivia, Susan & Gibson, John, 2013. "Economic Rise and Decline in Indonesia – As Seen from Space," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151210, Agricultural and Applied Economics Association.

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