Spillovers from agricultural processing

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 25 June 2019


Weston Theatre, #132 Crawford Building, Lennox Crossing, The ANU


Ryan Edwards, Crawford School of Public Policy


Ross McLeod, Seminar Convener, Arndt-Corden Department of Economics

This paper uses the proliferation of palm oil factories across Indonesia’s undeveloped hinterland as a natural experiment to study industrial onset and estimate spillovers from agricultural processing. The main finding is signs of urbanisation and structural change around factories: more non-agricultural employment, higher incomes, and more people, firms, and other economic and social organisations. These patterns can at least partially be explained by economic linkages, infrastructure and other public goods, and economies of scale in production. By focusing on subsistence rural regions in a large developing economy, this paper adds a globally-significant new case to a growing literature emphasising the importance of agglomeration externalities for understanding the birth of new towns, the spatial distribution of economic activity, and structural transformation.

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