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Macroeconomic, Trade and Investment Policies for supporting agricultural and rural development. Mohamad Ikhsan. Warr raises three important points How to encourage more people from agriculture to higher productivity sectors
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Macroeconomic, Trade and Investment Policies for supporting agricultural and rural development Mohamad Ikhsan
Warr raises three important points • How to encourage more people from agriculture to higher productivity sectors • The importance of reducing protectionism in agriculture since it hurts the poor. In addition, it also worsening income distribution • Rather than using trade policy, a country should focus on how to increase the capacity of the poor through education and health policies, facilitate the rural poor to connect with the market through building infrastructure.
On the structural change • Education and health policies is important element to make poor household is able to compete in a more global economy. • Labor is the most important asset of the poor. • Next questions? • What kind education level required? • Are supply side policies adequate? • How to improve investment climate in agriculture and the whole economy? • Fiscal trilemma facing many countries particularly Indonesia after the crisis time. • Dealing with democratic transition problems • Decentralization may affect the effectiveness of government. • What is the priority on government spending? • Composition of spending matters.
On trade policy and FDI • Agree that government should liberalize the agriculture. • Despite plenty of studies to support for liberalization, why it does not happen? • Managing of transition? • On the trade reform. Should country focus on liberalizing at one to one correspondence or more focus on tariff structure i.e., tariff escalation. • Without looking at tariff escalation supply chain led to higher value added potential would be difficult to realize. • FDI in agriculture may not be the most important issue. But it is more important to make agriculture and its related and supporting sectors open.
Finally, need a more comprehensive policy • Trade or Infrastructure alone will not enough, Need to supplement with other policies. • When supporting with the appropriate policy, rural infrastructure will help the poor and the farmer. • In a democratic transition country, an open with community participation will facilitate a more rapid poverty reduction. • Kecamatan Development Program in Indonesia is a good example.
