This paper examines the implications of oil palm estate development in Indonesias frontier province of Papua. Government planners believe that oil palm investment will develop the local economy, create jobs and reduce poverty. Using the inputoutput approach, we find that, in aggregate terms, oil palm investments boost the economic output in the province, generate jobs and increase worker salaries. However, the oil palm subsector operates in isolation and has limited economic multipliers. The number of jobs is potentially large, but those best positioned to benefit from them are mostly skilled migrants, not local poor. The government should reduce the size of plantation investments and plan their implementation as part of a broader development package to allow greater economic integration and skill acquisition by local communities. The priority areas for plantation development should be degraded, non-forest land.
Topic: oil palm, agribusiness, trade, production, poverty, economic growth, ecology
Publication Year: 2014
Source: Environment, Development and Sustainability 16(6): 1177-1196