PATHWAYS TO SUSTAINABLE AGRICULTURE AND REGIONAL ECONOMIC DEVELOPMENT IN INDONESIA USING PANEL DATA ANALYSIS
DOI:
https://doi.org/10.29103/icofeb.v3i1.1302Abstract
This research aims to analyze the relationship between sustainable agriculture and regional economic development in Indonesia by examining the influence of the agricultural sector’s Gross Regional Domestic Product (GRDP) and forest cover on rice production. The research utilizes panel data covering the period from 2010 to 2024 across five major provinces West Java, Central Java, North Sumatra, South Sulawesi, and Central Kalimantan. The analysis employs a Fixed Effect Model (FEM) using EViews software, where the variables of rice production and GRDP are transformed into natural logarithms (Ln) to maintain data proportionality. The results indicate that GRDP has a negative and significant effect on rice production, while forest cover has a positive and significant effect. These findings suggest that regional economic growth does not always enhance agricultural productivity, particularly when non-agricultural expansion leads to land-use conversion. Conversely, environmental preservation through increased forest cover supports the sustainability of rice production by improving soil quality and maintaining hydrological balance. The fixed effects across provinces reveal spatial disparities, where Central Java and West Java exhibit higher productivity, while North Sumatra and Central Kalimantan face structural constraints such as deforestation and limited infrastructure. This research underscores the importance of integrating economic and environmental policies to achieve sustainable agricultural development. The government should emphasize land-use regulation, irrigation improvement, and the adoption of environmentally friendly agricultural innovations. The novelty of this research lies in its integration of economic and ecological dimensions within a panel data framework that captures both spatial and temporal variations. However, this study is limited by the exclusion of variables such as rainfall, seed quality, and input prices. Future research is recommended to expand the model by incorporating additional environmental and institutional variables to test the robustness of these findings
Keywords: Sustainable Agriculture, Economic Growth, Forest Cover, Panel Data, Indonesia
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