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Improving the Lot of the Farmer: Development Challenges in Timor-Leste during the Second Decade of Independence

Author

Listed:
  • Lundahl, Mats

    () (Stockholm School of Economics)

  • Sjöholm, Fredrik

    () (Department of Economics, Lund University)

Abstract

Timor-Leste’s first ten years of independence have been turbulent and a large share of the population remains poor. Broad-based improvements in living standards will require improvements in agricultural production since most Timorese are subsistence farmers and since there is no modern sector to absorb a fast-growing population. This paper discusses what determines agricultural development in Timor-Leste and how such development can be achieved. This is done in two steps. The first one takes the production function as its point of departure. Agricultural output is seen as a function of inputs (land, capital and labor) and technology, which in turn are influenced by the infrastructure and institutions of the economy and by external factors which cannot be influenced by policy measures. The second part, in turn, emphasizes the fact that Timor-Leste is a market economy. A model of an agricultural household is constructed. The static optimum of the household is derived and the effects on production, consumption, sales, income and leisure of the household of different price incentives (changes in food prices, cash crop prices and prices of manufactured goods) are investigated.

Suggested Citation

  • Lundahl, Mats & Sjöholm, Fredrik, 2012. "Improving the Lot of the Farmer: Development Challenges in Timor-Leste during the Second Decade of Independence," Working Papers 2012:26, Lund University, Department of Economics.
  • Handle: RePEc:hhs:lunewp:2012_026
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    Keywords

    Timor-Leste; Agriculture; Poverty; Development; Rural;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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