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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 22, No. 3, pp.341-373
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2009
Received 18 Aug 2008 Revised 24 Sep 2008

The Assessment of the Importance of Agricultural Growth for Poverty Reduction in Indonesia

Tulus Tambunan
Director, Center for Industry, SME and Busniness Competition Studies, University of Trisakti, Building S, 5th floor, No. 22, Kampus A, Jl Kyai Tapa No. 1, Grogol, Jakarta 11440, Indonesia, Fax: +62-21-737-5365 Sjahrir@rad.net.id

JEL Classification: I 32, O13

Abstract

Although poverty is generally recognized as a highly multidimensional phenomenon, in the Indonesian context, poverty has been mainly an agricultural or a rural phenomenon. This has of course an important policy implication for poverty reduction in Indonesia. This paper examines the importance of agricultural growth for poverty reduction in Indonesia. It shows that: (i) agriculture is still the biggest employment-generating sector; (ii) the vast majority of poor families are in agriculture, consisting mainly of the marginal farmers and agricultural laborers; (iii) poverty in agriculture is caused by many factors, including lack or unequal distribution of land, and lack of capital; (iv) growth in gross domestic product (GDP) has an impact on poverty reduction; and (v) the decomposition of changes in poverty by sector shows that the output growth in agriculture appears to have the greater effect on the change in poverty than that in manufacturing, though it is lower than that in services.

Keywords:

Green revolution, Agricultural growth, Poverty reduction, Poor households

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