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The agricultural sector plays an important role for rural economies. However, ruralpopulations still face poverty as one main issue threating livelihoods. Regional concentrationand specialization in agricultural production and processing is referred to as agro-clusters.These clusters might generate income possibilities so that rural poverty may be reduced. Weempirically analyse this question by applying spatial econometric models becauseneighbouring regional economies are likely to influence each other. The analysis focuses onthe 545 sub-districts of the West Java province of Indonesia where about 10% of thepopulation live in poverty. Concentration of agricultural employment is found to havesignificant effects on poverty reduction in the sub-district as well as its neighbouring regions.Specialisation in agricultural output is also found to cause lower poverty rates. This impliesthat the government should support the regional specialization in agriculture. Based on theidentification of the comparative advantage of each sub-district, the government shouldestablish regional production nuclei in agriculture in order to boost the specialization. Carehas to be taken of the spillover effects the policies will have for surrounding areas.

Keywords: agricultural production ; spatial concentration ; spatial dependence ; clusters

Subject(s): Agricultural and Food Policy

Issue Date: 2015

Publication Type: Conference Paper/ Presentation

PURL Identifier:

Record appears in: European Association of Agricultural Economists (EAAE) > 150th Seminar, October 22-23, 2015, Edinburgh, Scotland

Autor: Wardhana, Dadan ; Ihle, Rico ; Heijman, Wim


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