Abstract
Indonesia sustained an average increase in agricultural output of 3.6% per year between 1961 and 2006, resulting in a more than fivefold increase in real output. This paper constructs Tornqvist-Thiel indices of agricultural outputs, inputs and total factor productivity (TFP) to examine the sources of growth in Indonesian agriculture over this period. The paper extends previous work on measuring productivity change in Indonesian agriculture by assembling more complete data on cropland and expanding the commodity coverage to include cultured fisheries in addition to crops and livestock. It also accounts for the contribution of the spread of rural education and literacy to agricultural growth. Results show that Indonesia pursued both agricultural intensification to raise yield, especially for food crops, and extensification to expand crop area and absorb more labor. Productivity growth accelerated in the 1970s and 1980s but stagnated in the 1990s once “Green Revolution” food crop varieties had become widely adopted. TFP growth resumed in the early 2000s led by diversification into non-staple commodities such as tropical perennials, horticulture, livestock and aquaculture. Agricultural extensification continued to be an important source of growth in many of parts of the archipelago where previously forested areas were converted to cropland. Human capital deepening, in the form of the spread of literacy and education in the farm labor force, made a modest but sustained contribution to agricultural productivity growth.
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Notes
Here and in the remainder of the paper I exclude the forestry and marine and inland capture fishery components of Indonesia’s agricultural sector from the analysis. Forestry and capture fisheries in Indonesia are extractive industries that generally have not competed directly for resources used in crop, livestock and aquaculture production. However, there is likely to be growing competition in land use among agriculture, plantation forestry and natural forest conservation in the coming years, and this would likely be a fruitful area to explore in future work.
I follow the Indonesian classification system for crop commodities whereby food crops (palawija) include rice, maize, cassava, soybean, mungbean and sweetpotato; horticultural or garden crops include other vegetables and fruits; and estate crops include oil palm, rubber, coconut, sugar, coffee, cocoa, tea, tobacco, fiber crops, nuts, spices and other specialty crops.
FIGIS and BPSa define marine and fresh water fisheries differently but report nearly identical aggregate estimates of fish production for Indonesia (FIGIS includes harvest of aquatic animals, plants and corals in aggregate fisheries production while BPSa excludes these species). In terms of resource use, BPSa assigns all production from aquaculture (brackish or freshwater) to cultured fisheries while FIGIS allocates production to either marine fisheries (including brackish pond aquaculture) or inland fisheries (including cultured production and open water catches).
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Acknowledgments
The author would like to thank the participants of a Workshop held at the Economic Research Service in Washington DC on March 15, 2007 and two anonymous reviewers for their helpful comments and suggestions. The views expressed in this paper are the author’s own and not necessarily those of the U.S. Department of Agriculture.
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Fuglie, K.O. Sources of growth in Indonesian agriculture. J Prod Anal 33, 225–240 (2010). https://doi.org/10.1007/s11123-009-0150-x
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DOI: https://doi.org/10.1007/s11123-009-0150-x
Keywords
- Agricultural development
- Growth accounting
- Human capital
- Total factor productivity
- Tornqvist-Thiel index