Global Journal of Commerce & Management Perspective
Open Access

Abstract

Impacts of Road Infrastructure on the Supply of Output and the Demand for Inputs in Food Crops in Indonesia: A Multi Input-multi Output Approach

Erma Suryani, Sri Hartoyo, Bonar M. Sinaga and Sumaryanto

The purpose of this study is to analyze the impacts of rural road infrastructure on the supply of output and the demand for inputs in food crops in Indonesia. The study was based on survey data from seven provinces across Indonesia, which was carried out in 2007 and 2010 by ICASEPS, JBIC, and IFPRI. The study adopts the multi-input multi output approach with a translog-profit-function as the method of analysis. Results of the study reveal that the elasticity of the supply of output and the demand for inputs on rural road infrastructure was in general inelastic. Road rehabilitation will lead to an increased supply of output and demand for inputs. This implies that improvements of rural road infrastructure are vital in stimulating food crop production, and accordingly the government needs to increase its budget allocation for rural infrastructure development.