COMPARATIVE ADVANTAGE IN AGRICULTURE SECTOR OF INDONESIA: AN ANALYSIS BY RCA
Tri Wahyu Cahyono, Professor Hiroshi Ohta
2013 | Tesis | S2 Magister Ek.Pembangunan-
Free trade agreements in an open economy are designed to increase economic growth. The implementation of free trade causes significant change in policy implications for a national economy. Therefore, identifying comparative advantage in agriculture in order to compete in the world markets opened through trade agreements is a key to ensure growth in the economic development of agriculture. This research study uses revealed comparative advantage analysis to describe comparative advantage in agriculture sector of Indonesia. It uses Normalized Revealed Comparative Advantage (NRCA) index, products mapping and Normalized Location Quotients (NLQ) to show comparative advantage of agriculture. Four subsectors of agriculture i.e food crops, horticultures, plantation crops, and livestock are explained using the data of two main sources, UN-COMTRADE and Agricultural Statistic of Indonesia [CD]. The analysis shows that plantation crops are the main subsector of agriculture in Indonesia which gives a surplus trade balance. It has a positive trend of comparative advantage. It also supports the government policy that Sumatera becomes center of palm oil. Using NRCA and NLQ, we see that centralizing palm oil in Sumatera is a good decision. Furthermore, the study can be used to formulate the planning and public policy implementation in Indonesia. Regarding comparative advantage theory, for example, if a country is better at palm oil production, the country should focus on this production and import the other goods which have comparative disadvantage from other countries. However, in terms of food security, a country is vulnerable if the domestic population depends upon global commodity exchange for its survival.
Kata Kunci : comparative advantage, Indonesian agriculture, RCA
