HOW to Facilitate or Stifle Economic Development: The Role of Agriculture in Indonesia and the Philippines

Strikingly different patterns of agricultural growth and widely divergent results in terlnsof rural income. poverty. and employment have cmcrged in Southeast Asia. In the Philippiies, with someregional variations, a patterns of declining red farm wages,increasing landlessness in worsening poverty and diminishing employmctlt relative to demand for jobs has emerged despite some brief periods of improvcment since 1960. Sincc 1980, the employment and poverty situation has deteriorated sharply,particularly in areas concentrating on single traditional export crops (lkc sugar or coconuts) but also in amore general context. Indonesia (particularly in Java, which contains over 60 pcrcent of the population) succeeded in reversing a seemingly inevitable worsening of poverty and inequality in the rural economy with strong evidence indicating that rural real wages and income of small farmers rose substantially between the mid-1970sand late 1980s. Why such divergent patterns of rural development exist and the lessons that can be extracted from thc varied cxperiences of 1ndoncsia and the Philippines are subjects of this papcr.