Modelling Sustainability Agriculture and Economic Development in Indonesia

Abstract

Agriculture sustainability plays an essential role in country development. This paper aims to examine whether sustainable agriculture is beneficial to economic development in Indonesia. The empirical analysis employs the autoregressive distributed lag model over the data from 1961-2016. The results show that sustainable agriculture significantly contributes to economic development in the long run for both models. The gross fixed capital and rural population as endogenous variables show the positive relationship in the long run, but technical assistance shows negative results. In the short run, all variables show mixed results in different lags. These findings conclude that agricultural policies are broadly on the right track. However, the government needs to focus more on the agricultural bureaucracy and strengthen its infrastructure.