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Abstract

Neighboring economies are likely to influence one another. The concentration of farming activities referred to as an agro-cluster generates opportunities for income and employment in a given region and its surrounding area. We analyze the link between poverty rates and agro-clusters by accounting for spatial perspective. To quantify agro-clusters, we employ one input and one output oriented measures. The analysis applies six spatial econometric specifications. We focus on the 545 sub-districts of West Java, where about 10% of the population live in poverty. The concentration of agricultural employment significantly reduces poverty in a sub-district as well as in neighboring regions. Specialization in agricultural output is also associated with lower poverty rates. These findings imply that policy interventions may be applied in a spatially selective manner because they will generate spillover effects on poverty reduction also in surrounding areas.

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