The Economic Analysis of the Agricultural Industries: The Case of Indonesia

Abstract

Background: Food is an essential thing in human activities. Therefore, it is said that agricultural sectors have a crucial role in human life. The purpose of this study is to analyze the role of the agricultural sector in the national economy of Indonesia. Method: The data used in this study are Indonesian input-output (IO) tables in 1990, 1995, and 2005. The analytical instrument of this research is IO analysis. This study uses more specific parts of the IO analysis such as simple household income multiplication, simple output multiplication, sensitivity distribution index, and power distribution index as analysis tools. The analysis of this research has a period of 1990-2005. In this study, the analyzed sectors are (1) paddy, (2) maize, (3) cassava, (4) other rootlcrops, including sweet potatoes, (5) groundnut, (6) soybeans, (7) other beans, (8) vegetables, (9) fruits, (10) cereals and other food crops, (11) rubber, (12) sugarcane, (13) coconut, (14) oil palm, (15) fibrelcrops, (16) tobacco, (17) coffee, (18) tea, (19) clove, (20) otherlestatelcrops, and (21) otherlagriculture. The first step of the methodology of this study is to describe the data, while the final step is to explain the study's conclusions and suggested further research. Results: The results show that, by using a simple output multiplier, the analyzed sectors did not include the top five Indonesian industries from 1990 through 2005. Conversely, one of the analyzed sectors, rubber, was admitted in the top five Indonesian industries in the period of the analysis from the point of view of another multiplier. Using both indices, almost all analyzed industries were consistent in the quadrant from 1990 through 2005. Conclusion: Indonesian government shall prioritize the rubber sector for the next economic development plans.