This paper examines the implications of oil palm estate development in Indonesia's frontier province of Papua. Government planners believe that oil palm investment will develop the local economy, create jobs and reduce poverty. Using the input-output approach, we find that, in aggregate terms, oil palm investments boost the economic output in the province, generate jobs and increase worker salaries. However, the oil palm subsector operates in isolation and has limited economic multipliers. The number of jobs is potentially large, but those best positioned to benefit from them are mostly skilled migrants, not local poor. The government should reduce the size of plantation investments and plan their implementation as part of a broader development package to allow greater economic integration and skill acquisition by local communities. The priority areas for plantation development should be degraded, non-forest land.
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DOI:
https://doi.org/10.1007/s10668-014-9519-8Altmetric score:
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Publication year
2014
Authors
Obidzinski, K.; Dermawan, A.; Hadianto, A.
Language
English
Keywords
agricultural development, economic development, employment opportunities, investment, oil palms, plantations, production, productivity, salaries
Geographic
Indonesia
Funders
Department for International Development (DFID), European Commission (EC)
