Technical change in Thai and Indonesian agriculture: measurement, socio-economic impact and policy implications

AGB/2002/012: Technical change in Thai and Indonesian agriculture: measurement, socio-economic impact and policy implications

Indonesia, Thailand

Australian National University, Australia

Professor Peter Warr
Phone: 02 6125 2682
Fax: 02 6125 3700
Email: peter.warr@anu.edu.au

• National Center for Genetic Engineering and Biotechnology, Thailand
• Chulalongkorn University, Thailand
• Bogor Agricultural University, Indonesia
• Indonesian Centre for Agriculture Socio Economic and Policy Studies, Indonesia

$399,799

01/01/2004 - 31/12/2006

01/01/2007 - 31/12/2007

Mr David Shearer

Productivity growth in the Thai and Indonesian agricultural sectors is an important driver of poverty alleviation. In Thailand more than 90 per cent of poor people reside in rural areas; in Indonesia this figure is more than 80 per cent. IN both countries the majortiy of these poor people are engaged in agricultural production. Raising productivity levels in both cases would help reduce poverty.

Growth in productivity in Thailand's agricultural sector has been significant, but the source of this growth is uncertain. Technical changes to improve agricultural productivity, such as improved crop varieties and management practices have been undertaken but the extent to which these have contributed to overall growth is not clear. Indonesia's experience has been different, with more rapid growth than Thailand until the early 1990s, followed by a decade of stagnating growth rates. Information about what types of technical change are most likely to reduce poverty is limited.

The role of public investment and extension services in productivity growth is also unclear. Since the economic crisis of 1997-98, both the Thai and Indonesian economies have experienced lower overall growth, and rising public debt. This has placed pressure the role of public investment, including in the use of investment in agricultural technology and its interactions with the broader economy and impacts on poverty alleviation. Answering these questions will help create an improved understanding of the role of technical change in agricultural productivity.

The objectives of the project are:
Statistical analysis identifying rates and factor biases of technical change in Thai and Indonesian agriculture.
Dissemination of the results of above through workshops and publications.
General equilibrium analysis of the social and economic effects of technical change in Thai and Indonesian agriculture.
Dissemination of the results of above through workshops and publications.
Development of capacity for general equilibrium analysis of technical change issues in Thai and Indonesian agriculture through training and hands-on experience.

Research: To analyse the effects that technological change in Thai and Indonesian agriculture has had on key economic variables which are important for public policy, including:
Poverty incidence
Economic inequality
Export performance
Public finance
Rural-urban migration
The economic structure of the agricultural sectors of Thailand and Indonesia.

Capacity building: To develop the capability within BIOTEC, Chulalongkorn University, Institut Pertanian Bogor (IPB) and Center for Agro Social Economic Research and Development (CASERD) to sustain research of this kind after the project is successfully completed.

In Thailand:
Agricultural data and statistical analysis based on collected data
Updating data base of PARA CGE model focusing on the input-output system and consumer demand system to 2000.
Income distribution and poverty measures undertaken including functional and size distribution of incomes
Application of PARA CGE model to effects of technological change and policies leading to the incorporation of a hypothetical technological change into the CGE model for empirically estimated rates of technical change

In Indonesia:
Agricultural data and statistical analysis incorporating data collection and econometric analysis
Updating data base of WAYANG CGE model focusing on the input-output system and consumer demand system to 2000.
Application of WAYANG CGE model to effects of technological change and policies applying to a range of policy experiments leading to the incorporation of a hypothetical technological change into the CGE model for empirically estimated rates of technical change.

Outcomes for this project are currently being prepared