Long-term impacts of global food crisis on production decisions : evidence from farm investments in Indonesia
AbstractDid the rise in food prices have a long-term impact on agricultural production? Using household-level panel data from seven provinces of Indonesia, this paper finds that the price shock created a forward-looking incentive to invest, which can dynamically enhance productivity in agriculture. It also finds that the impact of the price shock on investment behavior differs by initial wealth. In response to price increases, wealthy farmers invested more in productive assets, while poor farmers increased their financial savings as well as consumption. Price spikes relax liquidity constraints, which increases investments among the richer while do so savings and consumptions among the poor, possibly leading to diverging income inequality in the long run.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 6065.
Date of creation: 01 May 2012
Date of revision:
Markets and Market Access; Emerging Markets; Economic Theory&Research; Food&Beverage Industry; Regional Economic Development;
Other versions of this item:
- Nose, Manabu & Yamauchi, Futoshi, 2013. "Long-term Impacts of Global Food Crisis on Production Decisions: Evidence from Farm Investments in Indonesia," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149673, Agricultural and Applied Economics Association.
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-05-15 (Agricultural Economics)
- NEP-ALL-2012-05-15 (All new papers)
- NEP-SEA-2012-05-15 (South East Asia)
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