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Alternative industrial development paths for Indonesia: SAM and CGE analyses

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  • Bautista, Romeo M.
  • Robinson, Sherman
  • El-Said, Moataz

Abstract

In this article, we examine the economy-wide effects of three alternative growth paths for Indonesia's industrial sector using SAM (social accounting matrix) multiplier analysis and CGE (computable general equilibrium) modeling. The context of the analysis is the immediate post-crisis period — most likely to be in the next millennium — represented in our study by a modified benchmark data set for 1995. Special attention is given to the overall income and equity effects, considering that egalitarian growth has become a particularly important development objective in Indonesia. The results of SAM multiplier analysis indicate relatively strong macro-linkages from agricultural demand-led (ADL) industrialization, yielding a significantly larger increase in real GDP compared to that arising from industrial development oriented to either food processing or light manufacturing. The simulation results based on CGE modeling, which take account of nonlinearities and supply constraints that are ignored in SAM analysis, bear out the dominant influence of demand linkages in showing that ADL industrialization is associated with a larger GDP increase than the two industrial-led development paths.

Suggested Citation

  • Bautista, Romeo M. & Robinson, Sherman & El-Said, Moataz, 1999. "Alternative industrial development paths for Indonesia: SAM and CGE analyses," TMD discussion papers 42, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:tmddps:42
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    File URL: http://www.ifpri.org/sites/default/files/publications/tmdp42.pdf
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    References listed on IDEAS

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    1. Jaime de Melo & Sherman Robinson, 2015. "Trade Policy And Resource Allocation In The Presence Of Product Differentiation," World Scientific Book Chapters,in: Modeling Developing Countries' Policies in General Equilibrium, chapter 16, pages 357-365 World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Matthias Kalkuhl & Ottmar Edenhofer, 2016. "Knowing the Damages is not Enough: The General Equilibrium Impacts of Climate Change," CESifo Working Paper Series 5862, CESifo Group Munich.
    2. Parra Osorio, Juan Carlos & Wodon, Quentin, 2010. "Gender, Time Use, and Labor Income in Guinea: Micro and Macro Analyses," MPRA Paper 28465, University Library of Munich, Germany.
    3. World Bank, 2010. "Liberia - Employment and Pro-Poor Growth," World Bank Other Operational Studies 2966, The World Bank.
    4. Nganou, Jean-Pascal & Parra, Juan Carlos & Wodon, Quentin, 2009. "Oil price shocks, poverty, and gender: a social accouting matrix analysis for Kenya," MPRA Paper 28471, University Library of Munich, Germany.
    5. Kalkuhl, Matthias & Edenhofer, Ottmar, 2015. "Deforestation, Land Taxes and Development," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112961, Verein für Socialpolitik / German Economic Association.

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