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Abstract

For developing countries, a significant part of the economy, and the country’s poverty, is found in the agricultural sector and rural areas. This makes it quite important to achieve economic success of that sector, not only for improving overall economic growth but also to achieve key distributional objectives such as alleviating poverty. Vietnam’s agricultural sector’s successes are well known and striking to observe, especially when one looks at the country’s remarkable export performance. In contrast, Indonesia has had a modest record of agricultural performance and competitiveness, relying only on tree crop exports and a history of food crop protectionism. However, when one considers a range of measures of sectoral performance, the verdict is more nuanced. In this paper we examine a selection of five measures over the time period from 1990 to 2010 for both countries, measures beyond simple export statistics. The more detailed data show two different dimensions of these two countries’ agricultural sector performance. First, by some measures of productivity, Vietnam has a very strong record as expected, much better than that of Indonesia. But by other measures, Indonesia is at least as strong as Vietnam. Second, Vietnam’s performance is clearly strongest in the 1990s, but since 2000 its record is more modest, while Indonesia’s record in the 2000s is relatively strong, even surpassing Vietnam in some cases and years. This re-examination of available data forces a reconsideration of what is the cause of these changes in relative performance. It also provides lessons on how countries generally can reform their agricultural policies in order to achieve the best results for growth and poverty reduction. For both these countries, improved agricultural sector results are attainable with careful reform.

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