The Role of Investment, Transport Services and Trade in Achieving Food Security in Indonesia: A Structuration and Institutional Analysis

Abstract

The significant increase in food prices during 2007/2008 has become an alert for all societies in the world, especially Indonesia, to stand together to fight food insecurity. This thesis examines the role of investment, transport services and trade in achieving food security in Indonesia. A structuration and institutional framework has been designed to better understand the complex behaviours of government agencies at both national and local levels that influence the formulation of food security policy. The framework includes specific governance indicators, such as regulatory quality and political stability. On trade, this thesis provides a map of Indonesia’s product competitiveness in selected markets in the context of bilateral, regional and multilateral trade cooperation. The qualitative and quantitative analysis was used to develop the structuration and institutional framework. Fieldwork in three different regencies in Indonesia was conducted to observe best practices and lessons learned about the government’s efforts to achieve food security. In the quantitative analysis, Generalised Method of Moments was used to analyse the impact of investment, transport services and trade on food security. The empirical results showed that food exports and foreign investment have an adverse impact on achieving food security in Indonesia. In contrast, food imports, domestic investment and the transport services sector have a positive impact on food security. Of the governance indicators used in the models, regulatory quality has a negative impact on food security in Indonesia, while political stability has a positive impact. The general conclusion of this thesis is that coordination and collaboration among related government agencies need to be strengthened to realise an effective reciprocal interaction between policy goals and actions. An appropriate institutional arrangement to achieve food security in Indonesia is therefore crucial. The findings also suggest that the Indonesian government should be proactive in achieving food security by improving investment opportunities, realising more efficient transport services, strengthening trade cooperation at all levels based on product competitiveness, and maintaining good governance.