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Is plantation agriculture good for the poor? Evidence from Indonesia's palm oil expansion

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  • Ryan Edwards

Abstract

I study the poverty impacts of plantation-based agricultural growth, focusing on Indonesian palm oil. Using rich new administrative panel data, I exploit exogenous variation arising from Indonesia's unique institutions and the data's longitudinal features to identify causal effects. Increasing the palm oil share of land in a district by ten percentage points corresponds to a ten percent reduction in its poverty rate, and a narrowing of the poverty gap. Effects are similar across regions and at the province level. Oil palm expansion tends to be followed by a sustained boost to the value of agricultural output, manufacturing output, and district GDP.

Suggested Citation

  • Ryan Edwards, 2015. "Is plantation agriculture good for the poor? Evidence from Indonesia's palm oil expansion," Departmental Working Papers 2015-12, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2015-12
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    Cited by:

    1. Ketut Sukiyono & Muhammad Mustopa Romdhon & Gita Mulyasari & M. Zulkarnain Yuliarso & Musriyadi Nabiu & Agung Trisusilo & Reflis & Dompak M. T. Napitupulu & Yoga Nugroho & May Shiska Puspitasari & Sig, 2022. "The Contribution of Oil Palm Smallholders Farms to the Implementation of the Sustainable Development Goals-Measurement Attempt," Sustainability, MDPI, vol. 14(11), pages 1-16, June.
    2. Amzul Rifin & Feryanto & Herawati & Harianto, 2020. "Assessing the impact of limiting Indonesian palm oil exports to the European Union," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-13, December.
    3. Rashesh Shrestha & Ian Coxhead, 2018. "Can Indonesia Secure a Development Dividend from Its Resource Export Boom?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 54(1), pages 1-24, January.
    4. Pablo Pacheco & George Schoneveld & Ahmad Dermawan & Heru Komarudin & Marcel Djama, 2020. "Governing sustainable palm oil supply: Disconnects, complementarities, and antagonisms between state regulations and private standards," Regulation & Governance, John Wiley & Sons, vol. 14(3), pages 568-598, July.
    5. Krishna, Vijesh V. & Kubitza, Christoph, 2021. "Impact of oil palm expansion on the provision of private and community goods in rural Indonesia," Ecological Economics, Elsevier, vol. 179(C).

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    More about this item

    Keywords

    palm oil; cash crop; plantation; agriculture; poverty; Indonesia;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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