Special attention is given to the overall income and equity effects, considering that egalitarian growth has become a particularly important development objective in Indonesia. The simulation results based on CGE modeling, which take account of nonlinearities and supply constraints that are ignored in SAM analysis, bear out the dominant influence of demand linkages in showing that ADL industrialization is associated with a larger GDP increase than the two industrial-led development paths. However, to preserve the income gains for farm households and improve equity, it would be necessary to prevent the agricultural terms of trade from deteriorating - for example, through improvement of the country's ability to export farm products. While industrialization based on light manufacturing shows the most significant increase in the ratio of manufacturing value added to GDP, it is also associated with the smallest GDP increase and the worst equity effect. Download full-text discussion paper .
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