Capital Fundamentalism and Structural Transformation

Arbeitspapier

We revisit the role of Capital Fundamentalism, in the context of the Government of Indonesia's Inpres Desa Tertinggal (IDT or Left Behind Village) Program, which injected capital into poor village economies. We evaluate the impact of the program on village welfare and structural transformation adopting a (fuzzy) regression discontinuity design, which exploits village eligibility for identification. Welfare increased in rural as opposed to urban villages in Java, Sumatra and Bali and Nusa Tenggara, as households exited agriculture in favor of more productive activities in construction, industry and trade. We find no evidence that the program affected structural transformation or welfare in Kalimantan, Sulawesi or Papua, which suggests that structural transformation is a necessary condition for capital injections to foster village development.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 14444

Classification and Topics

• Classification: Wirtschaft ; Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices ; National Government Expenditures and Welfare Programs ; National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock ; Investment; Capital; Intangible Capital; Capacity ; Economic Development: General ; Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: capital fundamentalism ; structural transformation ; government intervention ; welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tohari, Achmad ; Parsons, Christopher ; Rammohan, Anu
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/236475
• Last update: 10.03.2025, 11:44 AM CET