Impact of Agricultural Infrastructure Exposure on Inequality and Social Capital

Abstract

Infrastructure is expected as one of the engines of growth. However, there are also concerns about infrastructure externalities, such as inequality, social capital, and environmental issues. This study aims to clarify these unintended consequences of infrastructure, focusing on inequality and social capital. According to the instrumental variable approach, the estimation result shows that the district with high exposure to integrated agricultural infrastructure negatively associates with inequity and positively corresponds to social capital. One of the mechanisms behind it is increased farming productivity. This result implies that the complementarity aspect between infrastructure types should be considered in the infrastructure development plan and execution.

Determinants of Income Inequality in a Time Perspective in Indonesia

“…The lack of agricultural infrastructure in boosting agricultural productivity is one of the obstacles to relate this sector to reduce the inequality. As concluded by Hesda (2022), agricultural infrastructure is negatively associated with inequality and positively correlated with social capital. Agricultural productivity is an important instrument in connecting the effects of agricultural infrastructure on reducing the inequality with increasing social capital.…”

“…Good infrastructure to support the agricultural sector can reduce inequality. Hesda (2022) conducted a study regarding to that issue to clarify the unintended consequences of infrastructure development, which focuses on inequality and social capital. The results show that districts with high exposure to agricultural infrastructure integration are negatively associated with an inequality and positively correlated with a social capital.…”