The Trend of Agricultural Sector Resilience in Indonesia During 2008-2020

Abstract

Purpose: The agricultural sector has an essential role in developing the economy of Indonesia (food, feed, raw materials for industry, contributor to gross domestic product, and labor absorption). For decades, this business field has survived (positive economic growth, while most of the business field faces contraction) during the country’s economic shock (financial crisis, economic setback, and pandemic situation). Thus, this study aims to measure Indonesia’s agricultural sector’s resilience and trends.Research Method: Secondary data have been collected from various sources: The UN Comtrade, World Bank, Central Bureau of Statistics, Ministry of Agriculture, Bank Indonesia, and Investing Coordinating Board of Indonesia. Moreover, principal component analysis is used to determine the index of agricultural sector resilience in Indonesia, while trend analysis is employed to investigate the development of the resilience index from time to time.Findings: The resilience of the agricultural sector varies from time to time. However, it is statistically proven (a = 1%) that resilience tends to increase over the last twelve years.Research Limitations: The variables to determine the agricultural sector resilience in Indonesia consist of trade balance, agricultural terms of trade, total investment, government spending in the agricultural sector, total credit, agricultural workers’ income, and percentage of agricultural workers to total workers. It is suggested that the future study, employed non-agricultural parameters such as environmental conditions and research and development budget to capture a more comprehensive situation on agricultural sector resilience.Originality/ Value: This study contributes to the renewal of the literature on the resilience of the agricultural sector. Moreover, the variables used to represent the parameters of agricultural development in Indonesia may be applied in other countries.