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Rice Price Adjustment and its Impact to the Poor

Author

Listed:
  • Mohamad Ikhsan

    (Director, Institute for Economic and Social Research, Faculty of Economics University of Indonesia)

Abstract

This paper attempts to analyze the impact of rice price policy changes on the poor. It is shown that contrary to widespread opinion, an increase in the price of rice, particularly through protection policies, will negatively impact the poor. In other words, protective rice price policies are anti-poor. Each 10% increase in the price of rice will lead to a 1% increase in the poor population, in other words more than two million Indonesians will fall below the poverty line as a direct effect of a 10% increase in the price of rice. Rice price increases also contain undesired distribution dimensions: income transfer from populations outside Java to populations in Java, transfer from urban to rural populations, and income transfers from populations in poor provinces to populations in rich provinces, or from the poor to the rich.

Suggested Citation

  • Mohamad Ikhsan, 2005. "Rice Price Adjustment and its Impact to the Poor," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 53, pages 61-97, April.
    • Handle: RePEc:lpe:efijnl:200503
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    More about this item

    Keywords

    Poverty-Economic development;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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