Regional Disparity in Accessibility to Non‑Farm Economic Involvement among Rural Indonesian Households

Indonesia had achieved high economic growth in the late 1980s and the first half of the 1990s. Yet rural poverty is pervasive and widespread across the country. Recently, the significance of rural non-farm economic activities has received much attention for stabilizing household income of the rural poor. This paper focuses on factors that influence rural Indonesian households' accessibility to non-farm economic activities. It has tested the propensity of non farm economic engagement among rural households by incorporating community and household characteristics. A simple econometric analysis with the country-wide sample has found that household demographic structure, educational attainment, rural infrastructure, agricultural technology, local market and geographical factors are the major determinants. However, the econometric analysis with five regional-based sub-samples have shown that main determinants are not the same as those found in the country-wide sample, and they do vary across the different regions. This paper suggests that it is very important to understand region specific household and community characteristics in order to design effective development policy tools and to have more viable non-farm economic activities in rural Indonesia.