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Bulletin of Indonesian Economic Studies
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
Constraints to Human Capital Investment in
Developing Countries: Using the Asian Financial
Crisis in Indonesia as a Natural Experiment
Treena Wu
To cite this article: Treena Wu (2013) Constraints to Human Capital Investment in Developing Countries: Using the Asian Financial Crisis in Indonesia as a Natural Experiment, Bulletin of Indonesian Economic Studies, 49:1, 113-114, DOI: 10.1080/00074918.2013.779772
To link to this article: http://dx.doi.org/10.1080/00074918.2013.779772
Published online: 21 Mar 2013.
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Bulletin of Indonesian Economic Studies, Vol. 49, No. 1, 2013: 113–7
ISSN 0007-4918 print/ISSN 1472-7234 online/13/010113-5
ABSTRACTS OF DOCTORAL THESES
ON THE INDONESIAN ECONOMY
Constraints to Human Capital Investment in Developing Countries: Using the Asian Financial Crisis in Indonesia as a Natural Experiment
Treena Wu ([email protected]) Accepted 2011, Maastricht University
Education is considered to be one of the drivers of economic growth. However, parental investment in education is lower in developing countries than in devel-oped countries. This raises the question whether parents in developing countries face low market rates of return on education or have a low preference for educa-tion, or whether they face investment constraints. This thesis aims to determine the constraints to human-capital investment in developing countries, using the inancial crisis in Indonesia in the late 1990s as a natural experiment.
The research determined two constraints at the primary school and junior high (SMP) levels during the crisis: (1) resource constraints in infrastructure, as meas-ured by the availability of electricity for learning in school and at home; and (2) monetary constraints, as measured by family income. Chapter 2 inds that parents used various adaptive strategies to ensure that their children continued their edu-cation during the inancial crisis, including shifting them to non-formal and infor -mal schooling (including home schooling); ensuring monthly school fees were paid at the expense of other educational costs; and selecting only those children with higher abilities to continue to SMP.
Chapter 3 inds that 12-year-old children who live and go to school in areas where there is electricity achieve higher test scores than children in under-developed areas, owing to the ixed placement of the national electricity grid in Indonesia. Chapter 4 inds that children who simultaneously worked and attended school during the inancial crisis did not impair their human-capital accumulation as much as would have been expected; children, especially boys older than 12 years, carried out more waged work during the crisis. But the prevalence of childhood labour increases the probability of poor outcomes in the formal labour market in adulthood. Nonetheless, child apprentices continuing the traditional family trade may provide high social returns.
Chapter 5 inds that reductions in family income (and, consequently, in spend -ing on education) dur-ing the inancial crisis were compensated for by increased time spent on education. Parents accounted for the loss in returns from previous educational investment on the stock of human capital accumulated by the child. There was also dynamic complementarity of investment, particularly for children who were close to completing SMP but less so for those who had just started SMP.
114 Abstracts of doctoral theses on the Indonesian economy
The thesis asserts that Indonesian parents do not have a low preference for education but do face constraints to human-capital investment. These constraints can be relaxed – for example, by the government expanding the distribution of electricity for educational use to under-developed areas, or allocating a dispro-portionately high number of scholarships to children who are just about to com-plete grade 8 or grade 9, to ensure that they graduate. The thesis also inds that Indonesian parents value non-formal and informal schooling.
© 2013 Treena Wu
http://dx.doi.org/10.1080/00074918.2013.779772
Sustainable Supply Chain Management: A Case Study of Indonesia’s Cocoa Industry
Normansyah Syahruddin ([email protected]) Accepted 2012, University of Bergamo
Since sustainable development was highlighted in 1987 as an important issue by the then World Commission on Environment and Development, many countries and irms have pursued excellence in sustainable practices related to the environ -ment, human resource management and quality management. To some extent, the agricultural sector has led this shift.
However, discussions of sustainable agricultural supply chains count for only one-tenth of the total literature on sustainable supply chains. Much research has focused on separate sustainable practices (rather than taking a holistic view), and this has potentially under-estimated the effect of such practices on national sup-ply chain operations. While sustainable agricultural supsup-ply chains are important to a country’s economic development, concerns about food safety have become a major issue for supply chains following food recalls around the world. Moreover, a relative lack of attention to farmers as the irst stage of the agri-food chain has inhibited the application of sustainable supply chain management in Indonesia’s agricultural sector.
This thesis examines the role of sustainable supply chain management in Indo-nesia’s cocoa industry. It argues that IndoIndo-nesia’s agricultural supply chains are linked to its economic development, and that this link is as strong as that in any other country. Indonesia’s cocoa supply chain serves as an example for under-standing how sustainable practices can be implemented in the agricultural supply chain as a whole: cocoa is an essential agricultural commodity in many coun-tries, and it plays an important role in the international food market. The cocoa industry itself employs millions of farmers worldwide, contributes signiicantly to eradicating poverty in many countries, and provides employment downstream and upstream. In Indonesia, it has faced several impediments to the introduc-tion of sustainable practices, such as the low incomes of farmers, the use of child labour, and the use of conventional transport vehicles for commercial purposes.
The results of the research suggest that implementing various sustainable prac-tices in each stage of the supply chain determines the performance of the supply chain as a whole. That is, implementing a sustainable practice in one link of the supply chain will affect not only the immediate parts of the chain but also its inal
