Welcome to the electronic edition of Indonesia in a Reforming World Economy: Effects on Agriculture, Trade and the Environment. The book opens with the bookmark panel and you will see the contents page. Click on this anytime to return to the contents. You can also add your own bookmarks. Each chapter heading in the contents table is clickable and will take you direct to the chapter. Return using the contents link in the bookmarks. The whole document is fully searchable. Enjoy. INDONESIA IN A REFORMING WORLD ECONOMY: Effects on Agriculture, Trade and the Environment Kym Anderson, Randy Stringer, Erwidodo and Tubagus Feridhanusetyawan (eds.) UNIVERSITY OF ADELAIDE PRESS Indonesia in a Reforming World Economy: Eff ects on Agriculture, Trade and the Environment Kym Anderson, Randy Stringer, Erwidodo and Tubagus Feridhanusetyawan (eds.) In the mid-1990s a joint research project was established between CASER (Bogor), CIES (Adelaide), CSIS (Jakarta) and RSPAS (at ANU, Canberra) to examine interactions between agriculture, trade and the environment in Indonesia. Funded by the Australian Centre for International Agricultural Research (ACIAR Project No. 9449), the specifi c objective of the project was to assess the production, consumption, trade, income distributional, regional, environmental, and welfare eff ects in Indonesia of structural and policy changes at home and abroad. Particular attention was to be paid to those structural and policy changes that could aff ect Indonesia’s agricultural sector over the next 5-10 years. Th e implications of national and global economic growth, of regional and multilateral trade liberalisation initiatives, and of Indonesia’s ongoing unilateral policy reforms were the initial focus of the study. However, with the onslaught of the fi nancial crisis that began in the latter part of 1997, the project leaders added that issue to the research agenda. INDONESIA IN A REFORMING WORLD ECONOMY Reprints Collection: Economics As well as being established to publish high quality refereed new works the University of Adelaide Press selects previously published books by staff for reprinting both electronically and as soft- cover books. Strengthening the Global Trading System Indonesia in a Reforming World Economy Reforming Trade Policy in Papua New Guinea and the Pacific Islands The Economics of Quarantine Global Wine Markets, 1961-2003 The Building of Economics at Adelaide (Barr Smith Press imprint) INDONESIA IN A REFORMING WORLD ECONOMY Effects on Agriculture, Trade and the Environment Kym Anderson, Randy Stringer, Erwidodo And Tubagus Feridhanusetyawan (eds.) Published in Adelaide by The University of Adelaide Press Level 1, 254 North Terrace University of Adelaide South Australia 5005 [email protected] www.adelaide.edu.au/press The University of Adelaide Press publishes externally refereed scholarly books by staff of the University of Adelaide. It aims to maximise the accessibility to its best research by publishing works through the internet as free downloads and as high quality printed volumes on demand. Electronic Index: this book is available as a downloadable PDF with fully searchable text. ____________________________________________________________________________ This book is a facsimile republication. Some minor errors may remain. Originally published by the Centre for International Economic Studies, University of Adelaide. © Kym Anderson, Randy Stringer, Erwidodo and Tubagus Feridhanusetyawan 2002, 2009 First published 2002 Republished 2009 This work is licenced under the Creative Commons Attribution 3.0 Unported License. To view a copy of this licence, visit http://creativecommons.org/licenses/by/3.0/ or send a letter to Creative Commons, 444 Castro Street, Suite 900, Mountain View, California, 94041, USA. This licence allows for copying any part of the work for personal and commercial use, providing author attribution is clearly stated. ____________________________________________________________________________ Subject Keywords: Agriculture Indonesia – Agricultural industries Indonesia – Indonesia Economic conditions – Indonesia Commerce For full Cataloguing-in-Publication data please contact National Library of Australia: [email protected] ISBN 978-0-9806238-7-1 (electronic) ISBN 978-0-9806238-1-9 (paperback) Printed by Griffin Press Cover image: iStockphoto Cover design: Chris Tonkin Contents PAGE List of tables, figures and boxes vii Acronyms xii Preface xiv List of contributors xvi 1 Introduction, by Randy Stringer, Erwidodo, Tubagus 1 Feridhanusetyawan and Kym Anderson 2 Effects of growth, its interruption, and the Uruguay 10 Round on Indonesian agriculture, by Anna Strutt and Kym Anderson 3 Effects of AFTA and APEC trade policy reforms on 28 Indonesian agriculture, by Tubagus Feridhanusetyawan, Mari Pangetsu and Erwidodo 4 Trade liberalisation and soil degradation in Indonesia, by 40 Anna Strutt 5 Will the Uruguay Round and APEC reforms harm air 61 and water quality in Indonesia? by Anna Strutt and Kym Anderson 6 Impacts of agricultural protection growth at home and 104 the WTO’s Doha Round on Indonesian agriculture, by Kym Anderson, Erwidodo, Tubagus Feridhanusetyawan and Anna Strutt 7 Effects of agricultural policy reform on household and 135 regional income distribution in Indonesia, by Peter Warr and Prem Thapa 8 Effects of farm policy reform on Indonesia’s secondary 164 food crops, by Sjaiful Bahri, Reni Kustiari and Glyn Wittwer vi 9 Effects of agricultural policy reform in Indonesia on its 179 food security and environment, by Erwidodo, Glyn Wittwer and Randy Stringer 10 Impacts of trade policy reform on income distribution 206 and poverty in Indonesia, by Johanna Croser APPENDIX 1: The WAYANG Model of the Indonesian 244 economy, by Glyn Wittwer APPENDIX 2: The GTAP Model and database, by Anna 255 Strutt vii List of tables, figures and boxes PAGE TABLES 2.1 Projected cumulative [and annual] percentage changes 13 in GDP and factor endowments assumed for various countries, 1992 to 2005 2.2 Changing structure of global GDP, 1992, 2005 and 15 2005ig 2.3 Percentage changes in sectoral output (and cumulative 16 changes in the compositional share of total GDP output) in Indonesia, 1992-2005, 1992-2005ig with and without Uruguay Round trade liberalisation 2.4 Sectoral shares of Indonesia’s GDP, actual 1992 and 18 2005 under various scenarios 2.5 Sectoral shares of Indonesia’s merchandise exports, 19 actual 1992 and 2005 under various scenarios 2.6 Agriculture and food processing exports and imports, 20 actual 1992 and 2005 under various scenarios 3.1 Impact of various trade liberalisations on sectoral 36 outputs in Indonesia 3.2 Impact of various trade liberalisations on sectoral 37 exports in Indonesia 3.3 Impact of various trade liberalisations on sectoral 38 imports in Indonesia 4.1 Contribution of each region to agricultural production 44 in Indonesia, by sector 4.2 Regional aggregation in the GTAP model 50 4.3 Commodity aggregation in the GTAP model 51 4.4 Welfare effects of Uruguay Round liberalisation for 53 Indonesia viii 4.5 Contribution from the agricultural and forestry sectors 53 to erosion in Indonesia 4.6 Change in soil erosion in Indonesia from Uruguay 55 Round implementation 5.1 Projected cumulative [and annual] percentage changes 66 in GDP and factor endowments assumed for various countries, 1992 to 2020 5.2 Percentage changes in sectoral output levels and in 70 sectoral shares of GDP due to economic growth, Indonesia, 1992-2010 and 2010-2020a 5.3 Percentage changes in sectoral output levels in 71 Indonesia following Uruguay Round and APEC trade reforms, Indonesia, 2010 and 2020 5.4 Recent and projected levels of atmospheric emissions 78 in the base cases, Indonesia, 1992, 2010, and 2020 5.5 Decomposition of changes in pollution as a 79 consequence of economic growth and structural changes, Indonesia, 1992-2010 and 2010-2020 5.6 Recent and projected levels of water use and quality in 82 the base cases, Indonesia, 1992, 2010, and 2020 5.7 Decomposition of pollution effects from Uruguay 85 Round trade reform (incl. in China), Indonesia, 2010 5.8 Sectoral decomposition of the total change in emissions 87 due to Uruguay Round implementation, Indonesia, 2010 5.9 Decomposition of pollution effects in Indonesia under 89 APEC liberalisation, 2020 5.10 Percentage changes in resource-sector output levels in 90 various regions of the world following Uruguay Round trade reform (including China), 2010 ix 5.11 Decomposition of pollution effects in Indonesia under 91 APEC liberalisation, with 0.5 percent p.a. extra GDP growth in APEC economies, 2020 5.12 Changes in pollution as a consequence of economic 93 growth and structural changes, Indonesia (a) 1992-2005 and (b) interrupted growth scenario, 1992-2005ig 5.13 Decomposition of pollution effects from Uruguay 95 Round trade reform (including in China), Indonesia 5A Import tariffs without and with Uruguay Round 102 liberalisation, by sector, Indonesia, 2010 6.1 Post-Uruguay Round tariffs (and agricultural 108 production and export subsidies), various country groups, 2005 6.2 Sectoral shares of GDP, post-Uruguay Round in 2005, 111 of private household consumption in 1995, and of trade in 1997 6.3 Effects on economic welfare (equivalent variation in 112 income) of removing distortions to various goods markets post-Uruguay Round, major economic regions, 2005 7.1 Classification of households in Indonesia 147 7.2 Sources of gross household factor incomes in Indonesia 148 7.3 Estimated effects of increases in rice consumption 153 subsidies