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Economic incentives and comparative advantage in Indonesian food crop production:


  • Gonzales, Leonardo A.
  • Kasryno, Faisal
  • Perez, Nicostrato D.
  • Rosegrant, Mark W.


In Indonesia production of food crops grew an impressive 4.3 percent a year between 1978 and 1988, largely as a result of favorable government pricing, research, and investment policies toward rice and other crops. In recent years, however, the high costs of subsidies to the government and the increasing competition for scarce resources among commodities have caused Indonesian policymakers to take a fresh look at these policies in order to determine what is needed in a changing economic environment. What policies should the government pursue for rice and other major food crops? Should the government provide incentives or investments to promote rice as an export crop? What have been the effects of government policies on the international competitiveness of other commodities such as corn or cassava? Is there a continuing role for large input subsidies, or should these subsidies be eliminated? What investments are appropriate in the food crop sector? The report examines trends in the government policies and production of five major food crops (rice, corn, soybeans, sugar, and cassava) in Indonesia; analyzes the effects of government input-output pricing policies on domestic production incentives for these food crops; and assesses their relative comparative advantage under the three trade regimes of import substitution, interregional trade, and export promotion.

Suggested Citation

  • Gonzales, Leonardo A. & Kasryno, Faisal & Perez, Nicostrato D. & Rosegrant, Mark W., 1993. "Economic incentives and comparative advantage in Indonesian food crop production:," Research reports 93, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:resrep:93

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    1. Thiele, Rainer, 1994. "Conserving tropical rain forests in Indonesia: a CGE analysis of alternative policies," Kiel Working Papers 621, Kiel Institute for the World Economy (IfW).
    2. Kirsten, Johann F. & Ohene-Anyang, E. & van Rooyen, Johan, 1998. "An Analysis Of The Comparative Advantage And Policy Incentives Of Commercial Wheat Production In South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 37(4), pages 1-13, December.
    3. Samani, Roya Eshraghi & Poursaeed, Alireza, 2015. "Cropping Pattern and Comparative Advantage of Agricultural Products in Ilam Province," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 5(3), September.
    4. Dethier, Jean-Jacques & Effenberger, Alexandra, 2012. "Agriculture and development: A brief review of the literature," Economic Systems, Elsevier, vol. 36(2), pages 175-205.
    5. Masters, William A. & Winter-Nelson, Alex, 1997. "Evaluating the Economic Efficiency of Agricultural Activities in Developing Countries: Domestic Resource Costs and the Social Cost-Benefit Ration," 1997 Occasional Paper Series No. 7 198201, International Association of Agricultural Economists.
    6. Gérard, F. & Marty, Isabelle & Erwidodo, 1997. "Evaluation of the Impact of Trade Liberalization on Food Crop Production and Farm Income in Lowland Java, Indonesia," 1997 Conference, August 10-16, 1997, Sacramento, California 197070, International Association of Agricultural Economists.
    7. Romeo M. BAUTISTA, 1998. "Effects Of Domestic Policies And External Factors On Agricultural Prices: Cassava And Soybeans In Indonesia," The Developing Economies, Institute of Developing Economies, vol. 36(2), pages 155-177, June.
    8. Eicher, Carl K., 1995. "Zimbabwe's maize-based Green Revolution: Preconditions for replication," World Development, Elsevier, vol. 23(5), pages 805-818, May.
    9. Rosegrant, Mark W. & Kasryno, Faisal & Perez, Nicostrato D., 1998. "Output response to prices and public investment in agriculture: Indonesian food crops," Journal of Development Economics, Elsevier, vol. 55(2), pages 333-352, April.
    10. Waqar Akhtar & Muhammad Sharif & Nadeem Akmal, 2007. "Analysis of Economic Efficiency and Competitiveness of the Rice Production Systems of Pakistan’s Punjab," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(1), pages 141-153, Jan-Jun.
    11. John Ssozi & Simplice Asongu & Voxi Amavilah, 2017. "Is Aid for Agriculture Effective in Sub-Saharan Africa?," Working Papers of the African Governance and Development Institute. 17/035, African Governance and Development Institute..
    12. Kei Kajisa & Takamasa Akiyama, 2005. "The Evolution of Rice Price Policies over Four Decades: Thailand, Indonesia and the Philippines," Oxford Development Studies, Taylor & Francis Journals, vol. 33(2), pages 305-329.
    13. Thomas, Marcelle & Orden, David, 2004. "Agricultural policies in Indonesia," MTID discussion papers 78, International Food Policy Research Institute (IFPRI).
    14. Dorward, Andrew & Kydd, Jonathan & Morrison, Jamie & Urey, Ian, 2004. "A Policy Agenda for Pro-Poor Agricultural Growth," World Development, Elsevier, vol. 32(1), pages 73-89, January.
    15. Bautista, Romeo M. & San, Nu Nu, 1998. "Modeling the price competitiveness of Indonesian crops," Journal of Asian Economics, Elsevier, vol. 9(3), pages 425-443.
    16. Raga Moahmed ELZAKI & Eltighani MIRGHANI ELAMIN & Shams ELDEIN H. AHMED & Ali MUSA EISSA & Azharia ABDELBAGHI ELBUSHA & Ali ABDELAZIZ SALIH, 2010. "Comparative Advantage Analysis of the Crops Production in the Agricultural Farming Systems in Sudan," EcoMod2010 259600050, EcoMod.
    17. Itty, P., 1996. "Profitability, efficiency and comparative advantage of African cattle meat and milk production: the case of trypanotolerant village cattle production," Agricultural Economics, Blackwell, vol. 14(1), pages 33-44, April.


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