The nexus between food security and Investment, exports, Infrastructure, and human capital development: Evidence across Indonesia
(a) Miguel Angel Esquivias, (b) Akhmad Jayadi, (c) Syahiru Shafiai

(b) Department of Economics, Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia
(b) Department of Economics, Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia
(c) Faculty of Business and Management, Universiti Teknologi MARA Cawangan Melaka, 78000 Alor Gajah Melaka, Malaysia

Abstract

We examine how different economic sectors impact food security in Indonesia, considering agriculture, industry, and services. Additionally, we investigate the influence of investment, exports, infrastructure development, and several socio-economic factors (human capital, unemployment, poverty, and population density) on food security. Our study covers the period from 2011 to 2019, encompassing all 34 Indonesian provinces, and employs GMM and other panel techniques to assess four key food security indicators: a Principal Component Analysis-based food index, daily protein consumption, daily calorie consumption, and agricultural production. Our findings reveal that investment significantly drives agricultural production and food security. Additionally, an increase in net exports is positively associated with higher calorie intake, protein consumption, and the food security index. Surprisingly, infrastructure expenditure negatively impacts the food security index, calorie and protein consumption. While the expansion of manufacturing activities threatens food security, growth in agriculture and the service sector supports higher protein and calorie intakes. Socio-economic factors, such as income inequality, poverty, and unemployment, positively correlate with agricultural production, indicating that as societal welfare decreases, rice production increases alongside shifts in dietary preferences. Agriculture may serve as an alternative employment source during economic downturns. Conversely, a higher Human Development Index and population density suggest that as Indonesia advances economically, the demand for calorie and protein-rich foods grows, even as agricultural production declines.

Keywords: Food Security, Sustainable Agriculture, food products trade, Foreign Direct Investment, Agricultural Production

Topic: Development economics