Presentation is loading. Please wait.

Presentation is loading. Please wait.

The Effects of Agro-clusters on Rural Poverty: A Spatial Perspective for West Java of Indonesia Dadan Wardhana, Rico Ihle, Wim Heijman (Agricultural Economics.

Published byArchibald Wright Modified over 8 years ago

Similar presentations

Presentation on theme: "The Effects of Agro-clusters on Rural Poverty: A Spatial Perspective for West Java of Indonesia Dadan Wardhana, Rico Ihle, Wim Heijman (Agricultural Economics."— Presentation transcript:

1 The Effects of Agro-clusters on Rural Poverty: A Spatial Perspective for West Java of Indonesia Dadan Wardhana, Rico Ihle, Wim Heijman (Agricultural Economics and Rural Policy) Prepared to be presented in EAAE 150 th Seminar, Edinburgh, UK, October 22-23, 2015 1

2 Presentation Outline:  Introduction  Theory  Data  Methodology ● Cluster measurements ● Model Specifications  Results and Discussion  Policy Remarks 2

3 Introduction Role of the agricultural sector in rural economies  Concentration of non-farm economy vs. concentrated agricultural sector  Shifting from agriculture to more developed non-farm to boost economies However, Agricultural productivity growth associated with higher economic performance and lower poverty rates (de Janvry & Sadoulet, 2010) More investment in agricultural sector increases welfare (World Bank, 2008) GDP growth in agriculture has at least three times larger positive impact on poverty reduction than for the rest of the economy How? 3

4 What are agro-clusters? Economic Agglomeration Collective efficiency (Schmitz & Nadvi, 1999) Competitive advantages (Porter, 1990) Pool of labourers, information & knowledge exchange (Krugman, 1995) Farmer Group Manufacturing Tourism Restaurants Exports Source: Authors 4

5 Theory of Spatial Agglomeration Effects Productivity curve Cost curve Number of labourers (Cluster size) Productivity per hectare Costs Profits Number of labourers (Cluster size) Profit per hectare “Spatial concentration in agriculture reduces rural poverty” (Kiminami & Kiminami, 2009) Source: Duraton, et al. (2010). p.34 Productivity Curve The higher size of clusters, the higher productivity. Cost Curve The higher size of clusters, the higher production costs Profit Curve concave profit vs. size of the cluster 5

6 Description of West Java B J Note: B : Bandung Metropolitan, one of cities in West Java J : Jakarta Metropolitan, a capital city of Indonesia Source: Authors 6

7 Data The Indonesia programme for the census of agriculture of the office of national statistics, 2013. The Indonesia programme for the census of poverty of BPS, 2011 District Statistical Yearbook published by BPS for all districts. The raw shapefile of West Java map. We focus on 545 sub-districts of West Java of Indonesia by using aggregated data at sub-district level. Poverty Rates (% of population) Source: Authors 7

8 Cluster Measurements  8

9 Spatial Regression Specifications ModelsSpecifications SAR (Spatial Autoregressive Model) Spatial lags in dependent variable (lnpov) for two baseline models SDM (Spatial Durbin Model) Spatial lags in both dependent variable and main explanatory variables (hc s and K s ) SEM (Spatial Error Model) Spatial lags in error terms for two baseline models 9

10 Baseline models: poverty rates and agro-clusters sq_hc s : squared cluster size; Xi,s : control variables, including Growth of farmer number, % smallholders, % farmers with 55 years old, population density, total area, % wetland, productivity, distance and time travel to the nearest city. D: dummy variable (1 = rural regions; 0 = urban areas) Independent Variables Cluster size (hc s ) Specialization index (K s ) 10

11 Results Variable (y= lnpov) SARSEMSDMSARSEMSDM Original variables Cluster size (hc) -0.0342-0.0379-0.0363 Square cluster size 0.00390.00380.0035 Krugman index (Ks) -0.1007-0.1026-0.0929 Growth of farmer number++++++ % of smallholders000000 % of farmers > 55 years------ Population density------ Total area of sub-district0+0000 % of wetland in total++++++ Productivity----0- Distance000000 Travel time++++++ Dummy rural region 000000 Spatially lagged variables Cluster size (hc) 0 Krugman index (Ks) 0 Population density 0 0 Travel time - - ++++++ + ++ + + + Note: + and – are significant at 5% 11

12 Conclusions  The higher number of farm labourers, the lower poverty is, but after reaching the optimal average number, the poverty rate rise.  The more specialization in agriculture or non-agriculture, sub- district may experience the lower poverty rate.  The direct effects of agro-clusters on poverty rates in the sub- district itself are larger than the spillover effects. 12

13 Policy Remarks In the sense of specialization  foster the specialisation of the sub-districts  establish production nuclei  control input availability and prices  improve market access In terms of maintaining cluster size improve farmers’ capabilities and knowledge. enforce networks Spatial spillover effects  improve the availability and quality of infrastructures 13

14 Agriculture in West Java Economic Agglomeration

15 Thank you

16 Testing Spatial Dependence  OLS? Diagnostic tests on baseline models Contiguity spatial weight matrix Moran I’s spatial autoregression,

17 Spatial Regression Specifications ModelsSpecifications SAR SDM SEM

18 Findings Variable (y= lnpov) hc as X variableKs as X variable SARSEMSDMSARSEMSDM Original variables Cluster size (hc) -0.0342***-0.0379***-0.0363*** Square cluster size 0.0039**0.0038**0.0035** Krugman index (Ks) -0.1007**-0.1026**-0.0929** Growth of farmer number0.0004*** 0.0003**0.0003*** % of smallholders-0.0860-0.0199-0.0584-0.1134-0.0533-0.0784 % of farmers > 55 years-0.9116***-1.0880***-0.8526***-0.8930***-0.9704***-0.8324*** Population density-0.0390***-0.0372***-0.0394***-0.0293***-0.0286***-0.0301*** Total area of sub-district0.0008*0.0010**0.00070.00050.00070.0004 % of wetland in total0.0021***0.0025***0.0019***0.0017**0.0021***0.0015** Productivity-0.0036***-0.0028**-0.0035***-0.0024**-0.0020*-0.0024** Distance-0.0002-0.0003-0.0001-0.0002-0.0001-0.0000 Travel time0.0897***0.1192***0.1142***0.0746***0.1001***0.0994*** D 0.06580.07630.07680.01460.02970.0261 Spatially lagged variables Cluster size (hc) 0.0102 Krugman index (Ks) -0.0131 Population density 0.0047 0.0049 Travel time -0.0510** -0.0486* 1.7599***2.5814***1.6542***1.8900***2.6569***1.7605*** 0.4039*** 0.4469***0.3864*** 0.4350*** 0.5015*** 0.4741*** Note: One, two and three asterisks denote significance at the 10%, 5% and 1% level, respectively.

Download ppt "The Effects of Agro-clusters on Rural Poverty: A Spatial Perspective for West Java of Indonesia Dadan Wardhana, Rico Ihle, Wim Heijman (Agricultural Economics."

Similar presentations

GEMACA II What Is Regional Competitiveness?  Can places compete? And what’s new about it?  Competing in which games for what prizes?  How do we tell.

GEMACA II What Is Regional Competitiveness?  Can places compete? And what’s new about it?  Competing in which games for what prizes?  How do we tell.
Role and potential small and medium-sized urban areas Latvia’s case

Role and potential small and medium-sized urban areas Latvia’s case
Comparative Advantage of a Region May 11, 2011. 2 Comparative Advantage of a Region I.Alfred Marshall’s industrial cluster II.Michael Porter’s diamond.

Comparative Advantage of a Region May 11, Comparative Advantage of a Region I.Alfred Marshall’s industrial cluster II.Michael Porter’s diamond.
Does FDI Harm the Host Country’s Environment? Evidence from Coastal and Interior China Helen Feng Liang University of California, Berkeley April 12, 2006.

Does FDI Harm the Host Country’s Environment? Evidence from Coastal and Interior China Helen Feng Liang University of California, Berkeley April 12, 2006.
Agglomeration Economies and Location Choices by Foreign Firms in Vietnam Dinh Thi Thanh Binh University of Trento, Italy.

Agglomeration Economies and Location Choices by Foreign Firms in Vietnam Dinh Thi Thanh Binh University of Trento, Italy.
Non-farm activities in rural areas Lectures for the Master course in Non-Farm Activities and Rural Development in Developing Countries at the University.

Non-farm activities in rural areas Lectures for the Master course in Non-Farm Activities and Rural Development in Developing Countries at the University.
WHY AND HOW TO SPECIALISE IN TOURISM: AN AGENDA FOR JAMAICA

WHY AND HOW TO SPECIALISE IN TOURISM: AN AGENDA FOR JAMAICA
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 2 Territorial Indicators for Regional Policies Vincenzo Spiezia Head,

OECD World Forum “Statistics, Knowledge and Policy”, Palermo, November Territorial Indicators for Regional Policies Vincenzo Spiezia Head,
Urbanization and Poverty Reduction Peter Hazell. Introduction In 2008 the World Bank published its World Development Report 2008: Agriculture for Development.

Urbanization and Poverty Reduction Peter Hazell. Introduction In 2008 the World Bank published its World Development Report 2008: Agriculture for Development.
South Carolina Economic Summit Douglas P. Woodward Director, Division of Research Moore School of Business University of South Carolina.

South Carolina Economic Summit Douglas P. Woodward Director, Division of Research Moore School of Business University of South Carolina.
1 21ST SESSION OF AFRICAN COMMSION FOR AGRICULTURE STATISTICS WORKSHOPWORKSHOP HELD IN ACCRA, GHANA, 28 – 31 OCTOBER 2009 By Lubili Marco Gambamala National.

1 21ST SESSION OF AFRICAN COMMSION FOR AGRICULTURE STATISTICS WORKSHOPWORKSHOP HELD IN ACCRA, GHANA, 28 – 31 OCTOBER 2009 By Lubili Marco Gambamala National.
The KisanBandhu: Creating a Globally Competitive Rural Growth Engine

The KisanBandhu: Creating a Globally Competitive Rural Growth Engine
Labor market consequences of trade openness and competition in foreign markets: the case of Mexico November 2nd, 2012 Daniel Chiquiar Enrique Covarrubias.

Labor market consequences of trade openness and competition in foreign markets: the case of Mexico November 2nd, 2012 Daniel Chiquiar Enrique Covarrubias.
Agricultural Policy Analysis Prof. Samuel Wangwe Executive Director REPOA 28 th July 2012.

Agricultural Policy Analysis Prof. Samuel Wangwe Executive Director REPOA 28 th July 2012.
Pathways out of poverty in the new agriculture John Staatz & Niama Nango Dembélé Michigan State University Cornell International Workshops on Agricultural.

Pathways out of poverty in the new agriculture John Staatz & Niama Nango Dembélé Michigan State University Cornell International Workshops on Agricultural.
Where is Agriculture Important to Canada’s Rural Economy? Presentation to seminar with Bioresource, Policy, Business and Economics University of Saskatchewan,

Where is Agriculture Important to Canada’s Rural Economy? Presentation to seminar with Bioresource, Policy, Business and Economics University of Saskatchewan,
Working and living in rural areas: People, Places and Policy Helen Mc Henry, Policy Analyst.

Working and living in rural areas: People, Places and Policy Helen Mc Henry, Policy Analyst.
Nkechi S. Owoo and Wim Naudé Are Informal Household Enterprises also subject to Agglomeration Economies? Evidence from Rural Africa Global Development.

Nkechi S. Owoo and Wim Naudé Are Informal Household Enterprises also subject to Agglomeration Economies? Evidence from Rural Africa Global Development.
Overview of Urban Economics

Overview of Urban Economics
Territorial scenarios of the MASST3 model in the ET2050 project Roberto Camagni, Roberta Capello, Andrea Caragliu and Ugo Fratesi Politecnico di Milano.

Territorial scenarios of the MASST3 model in the ET2050 project Roberto Camagni, Roberta Capello, Andrea Caragliu and Ugo Fratesi Politecnico di Milano.

Similar presentations

Ads by Google