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Cash Crop Choice and Income Dynamics in Rural Areas: Evidence for Post-Crisis Indonesia

Author

Listed:
  • Stephan Klasen

    (Georg-August-University Göttingen)

  • Jan Priebe

    (Georg-August-University Göttingen)

  • Robert Rudolf

    (Georg-August-University Göttingen)

Abstract

In this paper we investigate the factors affecting income levels, income growth, and poverty reduction in rural Indonesia following the crisis of 1997/98. We particu- larly investigate the relative roles of non-farm incomes, productivity improvements achieved via changes in crops versus improvements on the same crops, and demographic changes induced by the crisis on income dynamics in rural Indonesia. Using a unique household panel data set for Central Sulawesi that allows us to control for a large set of household and geographical characteristics, household fixed effects as well as endogeneity issues, we find that falling household size and the adoption and intensification of new cash crop varieties can explain a substantial part of the observed post-crisis developments. Moreover, we compare our results to cross-sectional data from SUSENAS, Indonesia\'s large scale national household survey. While the overall determinants of rural incomes are very similar across both data sets, we find that the importance of agricultural self-employed income seems to be higher in Central Sulawesi than in most other parts of Indonesia. Although several factors could explain these differences, lessons from our Central Sulawesi data suggests that unexploited potentials in the production of cash crops in other areas of Indonesia might contribute to these findings.

Suggested Citation

  • Stephan Klasen & Jan Priebe & Robert Rudolf, 2010. "Cash Crop Choice and Income Dynamics in Rural Areas: Evidence for Post-Crisis Indonesia," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 33, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:033
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    Cited by:

    1. Lee, Heera & Bogner, Christina & Lee, Saem & Koellner, Thomas, 2016. "Crop selection under price and yield fluctuation: Analysis of agro-economic time series from South Korea," Agricultural Systems, Elsevier, vol. 148(C), pages 1-11.
    2. Klasen, Stephan & Meyer, Katrin M. & Dislich, Claudia & Euler, Michael & Faust, Heiko & Gatto, Marcel & Hettig, Elisabeth & Melati, Dian N. & Jaya, I. Nengah Surati & Otten, Fenna & Pérez-Cruzado, Cés, 2016. "Economic and ecological trade-offs of agricultural specialization at different spatial scales," Ecological Economics, Elsevier, vol. 122(C), pages 111-120.
    3. Upali Wickramasinghe, "undated". "Fostering productivity in the rural and agricultural sector for inclusive growth and sustainable development in Asia and the Pacific Abstract:," MPDD Working Paper Series WP/16/07, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    4. von Braun, Joachim & Mirzabaev, Alisher, 2015. "Small Farms: Changing Structures and Roles in Economic Development," Discussion Papers 210464, University of Bonn, Center for Development Research (ZEF).
    5. Iimi,Atsushi & Humphreys,Richard Martin & Melibaeva,Sevara, 2015. "Crop choice and infrastructure accessibility in Tanzania : subsistence crops or export crops ?," Policy Research Working Paper Series 7306, The World Bank.
    6. Dzanku, Fred M., 2015. "Household-specific food price differentials and high-value crop production in rural Ghana," Food Policy, Elsevier, vol. 57(C), pages 73-82.

    More about this item

    Keywords

    Crop choice; Income diversification; non-farm sector; rural development; Indonesia;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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