00074918.2014.896244

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Download by: [Universitas Maritim Raja Ali Haji] Date: 17 January 2016, At: 23:29

Bulletin of Indonesian Economic Studies

ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20

The Effects of Modern Food-Retail Development

on Consumers, Producers, Wholesalers, and

Traditional Retailers: The Case of West Java

Sandra Sunanto

To cite this article: Sandra Sunanto (2014) The Effects of Modern Food-Retail Development on Consumers, Producers, Wholesalers, and Traditional Retailers: The Case of West Java, Bulletin of Indonesian Economic Studies, 50:2, 290-291, DOI: 10.1080/00074918.2014.896244

To link to this article: http://dx.doi.org/10.1080/00074918.2014.896244

Published online: 30 Jul 2014.

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290 Abstracts of Doctoral Theses on the Indonesian Economy

This study argues that despite differences in political situations resulting in the adoption of divergent economic strategies, the Vietnamese and Indonesian lead-erships were in fact pursuing a similar long-term goal: namely, to obtain an inde-pendent national economy. The Indonesian government was determined to get rid of the economic legacy of Dutch colonialism by placing the whole economy under strong state control and ownership, in accordance with the spirit of Guided Democracy and Guided Economy of the late 1950s and early 1960s. This effort much resembled the socialist transformation of North Vietnam in the late 1950s and the many means by which the government of South Vietnam concentrated economic power in its hands during the late 1950s and early 1960s.

The Effects of Modern Food-Retail Development on Consumers, Producers, Wholesalers, and Traditional Retailers: The Case of West Java

Sandra Sunanto ([email protected])

Accepted 2013, ISS of Erasmus Rotterdam University

An increase in the number of supermarkets and hypermarkets in Indonesia in the last decade suggests that the Indonesian government has sought to liberal-ise the country’s food-retail sector to encourage the growth of local economies. This thesis examines the effects of such developments on actors in the retail value chain in West Java from 2002 to 2010—from agricultural producers and local

food processors to wholesalers, traditional retailers, and consumers. It inds that

producers processors, and wholesalers of fresh goods (such as fruit, vegetables, local dairy products, and processed meat) who are able to meet the

procure-ment requireprocure-ments of nearby supermarkets and hypermarkets can beneit from

the high demand from consumers for local produce in modern food retailers. It

also inds that consumers’ store preferences have shifted away from traditional

retailers towards supermarkets and hypermarkets, owing to better product

avail-ability, quality, price, and variety. Consequently, traditional retailers, particularly

traditional markets, tend to suffer from the entry of modern food retailers. The study draws on interviews with farmers, local food processors, wholesal-ers, procurement managwholesal-ers, and owners of supermarkets and hypermarkets; sur-veys of 550 consumers in West Java; monthly sales data from local food processors, agricultural producers, and vegetable and fruit wholesalers; and National Socio-economic Survey (Susenas) data on the monthly spending on food and non-food items of households. It applies non-parametric statistical tests, such as McNemar

and Chi-square tests, to hypotheses about the effects of modern food retailers on the store preferences of consumers and on the proits of traditional retailers, and

it uses a regression analysis to test the hypothesis that modern food-retail

devel-opments beneit agricultural producers, local food processors, and wholesalers.

The results indicate that traditional markets, particularly sellers of fruit,

veg-etables, meat, and ish, suffer most from the arrival of modern retailers. Some actors in the retail value chain beneit from the developments, whereas small

suppliers, in particular, need to increase their knowledge and skills to meet the requirements of modern retail procurement systems. Building farmers’ groups

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Abstracts of Doctoral Theses on the Indonesian Economy 291

is one of this study’s proposed recommendations. Individual small farmers ind it dificult to meet the trading terms of supermarkets and hypermarkets, and therefore they cannot sell their products directly to modern retailers. Farmers’

groups help to connect their members with supermarkets and hypermarkets, and manage consistency by allocating and sharing production. They also serve as a communication channel between farmers and their customers.

This thesis is the irst integrated analysis of the effects of supermarkets and hypermarkets on the local economy. Its indings will help policymakers—in this

case, municipal governments—to manage the development of modern retail in their municipalities in order to increase the welfare of local producers by

provid-ing more beneits from the development of modern food retail. Such develop -ments do not seek to eliminate traditional retailers, but a lack of resources means that the latter cannot compete with supermarkets and hypermarkets. The study asserts that traditional retailers therefore need to reposition themselves by pro-viding convenience, good-quality products, and attractive product displays for their customers.

Agglomeration Economies, Firm-Level Eficiency, and Productivity Growth:

Empirical Evidence from Indonesia

Wahyu Widodo ([email protected]) Accepted 2013, Curtin University

Agglomeration, or the clustering of similar irms in one location, has characterised recent industrial development in Indonesia, but determining its effects on irm-level eficiency and productivity growth remains dificult. There exist few empir -ical studies of the agglomeration effects in the context of Indonesia. This thesis

examines whether location-speciic agglomeration economies have positive effects on irm-level eficiency and productivity growth in Indonesian manufacturing.

The beneits of agglomeration accrue to agglomerated irms mainly in the form of externalities that improve eficiency and productivity. The empirical analysis

focuses on three key features of agglomeration economies, namely Marshall– Arrow–Romer externalities (or specialisation), Jacobs’s externalities (or

diver-sity), and Porter’s externalities (or competition). It also analyses irm and industry characteristics thought to inluence irm-level eficiency and productivity growth, including variables for irm age, size, location, and market concentration both for

urban regions and for industrial complexes. In considering the characteristics of

speciic manufacturing industries, regions, and complexes, this thesis uses the

stochastic production frontiers approach to examine the effect of agglomeration

economies on irms’ productive eficiency levels. It subsequently uses the Färe–

Primont productivity index to measure productivity growth and its decomposi-tion, and it applies econometric estimations (using panel data) to investigate the effect of agglomeration economies on productivity growth.

The empirical results show evidence of positive specialisation effects and nega-tive diversity effects, indicating that specialisation is more favourable than

diver-sity for stimulating irm-level eficiency. They conirm that inter-irm knowledge