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Determinants of the palm oil industry productivity in Indonesia

Author

Listed:
  • Tina Herianty Masitah
  • Maman Setiawan
  • Rina Indiastuti
  • Adhitya Wardhana

Abstract

This paper investigates total factor productivity growth (TFPG) and its determinants in the Indonesian palm oil sector industries. TFPG is estimated using a growth accounting method. This paper applies the fixed effects model to investigate the determinants of the TFPG. The data is sourced from a manufacturing survey of the Indonesian Bureau of Central Statistics (Badan Pusat Statistika/BPS) for the period 2000–2017. This paper finds that the TFPG of the Indonesian palm oil industry is relatively low. Moreover, output growth, output per worker, export activity, and wages per worker have significant effects on the TFPG. The effect of output growth, which is dominated by the large use of inputs, raises concerns in the aspect of environmental sustainability due to uncontrolled land expansion.

Suggested Citation

  • Tina Herianty Masitah & Maman Setiawan & Rina Indiastuti & Adhitya Wardhana, 2023. "Determinants of the palm oil industry productivity in Indonesia," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2154002-215, December.
    • Handle: RePEc:taf:oaefxx:v:11:y:2023:i:1:p:2154002
    DOI: 10.1080/23322039.2022.2154002
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