Title: Agribusiness development and palm oil sector in Indonesia
Abstract: The economies of developing countries are witnessing remarkable growth. The BRICs (Brazil, Russia, India, and China) and other countries attract foreign investment owing to the availability of cheap labor, natural resources, potential retail markets, etc. Furthermore, Indonesia has achieved a stable annual economic growth of 5–6% since 2004, even though it was deeply affected by the 1997–1998 economic crisis. The Indonesian economy was slowed down by the recession arising from the Lehman Brothers’ shock bankruptcy declaration in 2008, but is recovering from this setback. The economic growth of developing countries is driven mainly by the export of agricultural products and natural resources. The process of change in the domestic agricultural sector has not been well examined, although the rapid export-oriented growth of developing countries has been studied. The structural change in the agricultural sector that is behind this economic growth should be analyzed. In Indonesia, a Structural Adjustment Policy 2) was implemented after the mid-1980s to reform the economy into an export-oriented one, and agribusiness development was pursued in the agricultural sector. This policy direction was maintained and was further clarified after the crisis in 1998 through the Structural Reform Policy of IMF programs and other liberal economic reform programs. As for the Indonesian agricultural sector after the crisis, Gerard and Ruf (2001) showed how the fall in the exchange rate and international commodity price fluctuation after the crisis affected the production of crops for export. In the Gerard-Ruf study, the impact of the crisis on agriculture is seen to be mainly the impact of the fluctuation of the exchange rate on the price of agricultural products and the terms of trade of the local farmers. In other words, the existing trend in agricultural policy is regarded merely as a given premise and, more concretely, the study overlooks the question of how the trend in agricultural policy was affected by the Economic Reform and how the entire structure of the agricultural sector changed along with the change in the trend in policy. The governments of developing countries have implemented liberal economic policies, deregulation and liberalization of
Publication Year: 2010
Publication Date: 2010-05-31
Language: en
Type: article
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Cited By Count: 4
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