Agriculture Public Spending and Growth in Indonesia

This paper analyzes the trends and evolution of public spending in the agriculture sector in Indonesia, as well as the impact of public spending on agricultural growth. It finds that, in line with empirical work undertaken in other countries, public spending on agriculture and irrigation during the period 1976-2006 had a positive impact on agricultural growth, while public spending on fertilizer subsidies had the opposite effect. The composition of spending patterns in Indonesia over the past decade can partly explain why significant increases in public spending for agriculture have not resulted in a commensurate increase of agricultural production. The paper is structured as follows. Section I presents analytical and empirical findings about the impact of overall public spending on growth, with a particular focus on Indonesia, followed by an analysis of the government's role in agriculture. More precisely, it discusses how public spending can contribute to higher productivity and faster growth in the sector. The section draws lessons from the empirical literature and country examples worldwide, exploring the implications of some of these findings in the Indonesia context. Section II presents the results of an empirical analysis of the impact of agriculture public spending on agriculture gross domestic product per capita growth in Indonesia, using time series analysis with both ordinary least squares and generalized method of moments econometric techniques. Section III analyzes in detail agriculture public spending trends in Indonesia over the period 2000-08, highlighting that a large and increasing share of the spending is being allocated to subsidies (fertilizer, credit, seeds) and to fund transfers to farmers and farmers' groups.

Bibliographic Details

Main Authors:	Armas, Enrique Blanco, Osorio, Camilo Gomez, Moreno-Dodson, Blanca, Abriningrum, Dwi Endah
Language:	English
Published:	2012-02-01
Subjects:	ACCESS TO CREDIT, ACCESS TO FOOD, ACCOUNTING, ACTUAL YIELDS, AGRIBUSINESS, AGRICULTURAL DEVELOPMENT, AGRICULTURAL ECONOMICS, AGRICULTURAL EQUIPMENT, AGRICULTURAL EXTENSION, AGRICULTURAL EXTENSION SERVICES, AGRICULTURAL GROWTH, AGRICULTURAL INPUTS, AGRICULTURAL MARKETS, AGRICULTURAL POLICIES, AGRICULTURAL POLICY, AGRICULTURAL PRODUCTION, AGRICULTURAL PRODUCTIVITY, AGRICULTURAL PRODUCTS, AGRICULTURAL PROGRAMS, AGRICULTURAL R&D, AGRICULTURAL RESEARCH, AGRICULTURAL SCIENCE, AGRICULTURAL SECTOR, AGRICULTURAL TECHNOLOGIES, AGRICULTURE, AGRICULTURE CREDIT, AGRICULTURE MARKETS, AGRICULTURE ORGANIZATION, AGRICULTURE RESEARCH, AGRICULTURE SECTOR, AGRICULTURE SECTORS, ANIMAL HEALTH, ARABLE LAND, BEAN, BUDGET CONSTRAINTS, CATTLE, CENTRAL BANK, CENTRAL GOVERNMENT SPENDING, CEREALS, COMBINES, COMMODITIES, COMPETITIVENESS, CONSUMERS, CROPPING, CROPS, DEBT, DECENTRALIZATION, DEFICITS, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DIMINISHING RETURNS, ECONOMIC GROWTH, ECONOMIC PERFORMANCE, ECONOMIC SURVEYS, ECONOMIES OF SCALE, ELIGIBLE FARMERS, EXPORT, EXPORT PERFORMANCE, EXPORTS, EXTENSION PROGRAMS, EXTERNALITIES, EXTERNALITY, FAO, FARM, FARMER ORGANIZATIONS, FARMERS, FARMLAND, FARMS, FINANCIAL CRISIS, FISCAL POLICY, FIXED COSTS, FOOD CROPS, FOOD PRICES, FOOD SAFETY, FOOD SECURITY, FORESTRY, FRUITS, GDP, GDP PER CAPITA, GENDER, GOVERNMENT EXPENDITURES, GOVERNMENT SPENDING, GRAIN, GRAIN PRICES, GRANTS TO FARMERS, GREEN REVOLUTION, GROSS DOMESTIC PRODUCT, GROSS DOMESTIC PRODUCT PER CAPITA, GROWTH RATE, HIGH YIELDS, HIGH-VALUE PRODUCTS, HOUSEHOLDS, HOUSING, HUMAN CAPITAL, IFPRI, INCOME, INCOME LEVELS, INCOME SUPPORT, INCOMES, INTELLECTUAL PROPERTY, INTELLECTUAL PROPERTY RIGHTS, INTEREST RATES, INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE, INTERNATIONAL MARKETS, IRRIGATION, IRRIGATION SYSTEMS, LIVESTOCK, MACROECONOMIC STABILITY, MAIZE, MAIZE YIELDS, MARGINAL PRODUCTIVITY, MARKETING, MARKETING ASSISTANCE, MEATS, MOA, MULTIPLIER EFFECTS, MULTIPLIERS, NATIONAL GOVERNMENTS, NEGATIVE EXTERNALITIES, NEW TECHNOLOGIES, OPPORTUNITY COST, OPPORTUNITY COSTS, POLITICAL ECONOMY, POLLUTION, POSITIVE EXTERNALITIES, POTATOES, POVERTY REDUCTION, PRIVATE GOODS, PRIVATE SECTOR, PRODUCTION INCREASES, PRODUCTION INPUTS, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROPERTY RIGHTS, PUBLIC, PUBLIC DEBT, PUBLIC ECONOMICS, PUBLIC EXPENDITURE, PUBLIC EXPENDITURE REVIEW, PUBLIC EXPENDITURE REVIEWS, PUBLIC EXPENDITURES, PUBLIC FINANCE, PUBLIC FUNDS, PUBLIC GOOD, PUBLIC GOODS, PUBLIC INFRASTRUCTURE, PUBLIC INVESTMENT, PUBLIC INVESTMENTS, PUBLIC RESOURCES, PUBLIC SECTOR, PUBLIC SERVICES, PUBLIC SPENDING, QUALITY STANDARDS, QUARANTINE, RESEARCH & DEVELOPMENT, RESOURCE ALLOCATION, RICE, RICE CULTIVATION, RICE RESEARCH, RICE YIELDS, RISK AVERSE, ROADS, ROOTS, RURAL AREAS, RURAL INFRASTRUCTURE, RURAL POVERTY, RURAL ROADS, SEEDS, SOCIAL WELFARE, TAX, TAX REVENUE, TAX REVENUES, TAXATION, TECHNICAL ASSISTANCE, TECHNOLOGY TRANSFER, TRANSACTION, TRANSITION ECONOMIES, TREASURY, UNITED NATIONS, UNIVERSITIES, VEGETABLES, VOLUME, WATER RESOURCES,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120223091128 https://hdl.handle.net/10986/3263
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