The decentralisation process in Indonesia and its impact on the agricultural sector / by Tobias Axelsson

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The thesis “Peasants and policymakers : agricultural transformation in Java under Suharto” shows that Indonesia commenced a transformation process but did not see it through, resulting in an economy more investment-driven than agriculturally-led. Inspired by the East Asian model, the thesis focuses on three core areas within the agricultural transformation process. Firstly, yields and labour productivity whereby it is shown that the principal source of productivity growth was through land augmenting policies. More interestingly, it is shown that labour productivity increased steeply between 1977 and 1984 only to slow down thereafter.

The second issue discussed in the thesis is income. Though the focus is predominantly on agricultural income, an increasing proportion of the rural population is now deriving a significant part of their income from off-farm activities. It is shown here that the land holders’ income from rice increased dramatically in the early 1980s before levelling out. For landless labourers there was also an increase in income, again predominantly achieved in the early 1980s.

The final aspect, equity, is closely related to the other two and is measured using data on consumption, income and landholdings. In this chapter, a very interesting image appears, revealing a general pattern of agriculture stagnating from the second half of the 1980s onwards. In order to determine the reasons for this slowdown in the agricultural transformation process, a qualitative approach has been used. Interviews with farmers and public officials at a local level have been combined with extensive analyses of both local and national policy documents. It can be argued that the process stalled as a consequence of farmers being averse to change and modernity but this thesis shows that factors in the slowdown in change can in fact be found in actions by the state, as this was the driving force behind the transformation of agriculture. The thesis also shows that motives for change were urban rather than rural. In conclusion, the development process lacked the dynamic to generate its own growth, Javanese agriculture was still vulnerable and the country could not sustain the blow when the crisis hit in 1997.

Peasants and policymakers : agricultural transformation in Java under Suharto / Tobias Axelsson. – Lund : Lund University, 2008. – xii, 196 p. (Lund studies in economic history ; 45)

Link to thesis

The decentralisation process in Indonesia and its impact on the agricultural sector / by Tobias Axelsson
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