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By Francoise Gerard, Francois Ruf

Indonesia's financial and political hindrance is tested the following relating to its impression on Indonesia's agricultural region. The twelve essays that include this quantity take a micro-economic technique and research depends upon saw proof and first-hand info accumulated either prior to and after the country's concern. this can be a vigorous, good illustrated and instructive ebook.

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Extra resources for Agriculture in Crisis: People, Commodities and Natural Resources in Indonesia, 1996-2000

Sample text

The differences between the various grades have been eliminated, as they cancel each other out in the long run. The slide in prices during 1997 is clearly observable, especially during the first half of the year. Prices then bottom out at a level much lower than in previous cyclical troughs. If the trend had been in line with past troughs, we would have expected a low of 175 in the index value. The formula discussed above helps understand how this price response came about. Initially, it was assumed that Thailand would devaluate the baht without other countries following suit.

5 Among the measures announced were that: new political parties would be allowed seats in parliament, the president and vice-president would be limited to a maximum of a two 5-year terms, parliamentary elections would be held in May or June 1999, all parties meeting the legal requirement to compete in the election would be permitted to do so, parliamentary representation of the military would be reduced, and an independent commission would be established to oversee the elections. 6 The statistics do not include parts of the informal sector, which grew during the crisis.

The first factor that matters is how producers react to this increase in the local price. The parameter describing this reaction is called supply elasticity. Suppose, for example, that the rupiah devalues by 10%. Local producers would initially receive 10% more for their commodity. 3 x 10% more, so supply from Indonesia would initially rise by 3%. This increase would then have a negative effect on world prices in US dollars. The next question is: at what price would the market return to equilibrium?

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