INTERNATIONAL TRADE AND THE WELFARE IN … · Keywords: international trade, Social Accounting...

437International Trade And The Welfare In Indonesia: Application Of Structural Path Analysis

INTERNATIONAL TRADE AND THE WELFARE IN INDONESIA: APPLICATION OF STRUCTURAL

PATH ANALYSIS

Sulthon Sjahril Sabaruddin1

This paper evaluates the impact of the international trade on the welfare of society in Indonesia,

using two tools; the Social Accounting Matrix (SNSE 2008) and the Structural Path Analysis (SPA). The

simulation result shows within the Agriculture commodities, the export affect the welfare more through

the path of labor. Within industry, the capital is more dominant than the labor. Regarding the import,

the impact on the welfare is transmitted through two main channels; production path and the tax. The

production input involved on this process includes the middle income urban workers, and also middle

income entrepreneurs both urban and rural.

Abstrak

Keywords: international trade, Social Accounting Matrix, Structural Path Analysis, welfare, Indonesia.

JEL Classification: F14, F15, F17

1 Pusat Pengkajian dan Pengembangan Kebijakan Kawasan Amerika dan Eropa. Kementerian Luar Negeri Republik Indonesia. Email: [email protected]

438 Bulletin of Monetary, Economics and Banking, Volume 17, Number 4, April 2015

I. INTRODUCTION

Economic diplomacy has now become one of the priorities in the foreign policy of Indonesia, especially under the current government (of President Joko Widodo). The Indonesian president said that all ambassadors of Indonesia should act as sales persons, placing 90 per cent of attention on the economic aspects and only 10 percent on political aspects (Susilo, 2014). Jokowi (President Joko Widodo) wants access to overseas markets expanded so as to encourage the export volume of Indonesia. It is expected with the development of Indonesia’s exports, it may ultimately help drive the economy in the country, including the welfare of all the people of Indonesia.

To achieve economic prosperity, economic diplomacy has become an increasingly important part in foreign policy in many countries. One part of the economic diplomacy is diplomacy around trading. Foreign trade is one of the important variables of economic growth for an economy. It is not surprising that all countries strive to promote trade cooperation with the aim of encouraging economic growth. These objectives can be achieved by encouraging domestic exports while reducing the volume of imports, as it is understood by the mercantilist economists.

One of the indicators of economic growth is the Gross Domestic Product (GDP). GDP is an indicator of economic prosperity in a country and can be a reference for assessing the welfare of society as measured by the level of income (income).By increasing exports of a country, people’s income would also rise. However, in this era of today’s open economy, import flows would also be increased and influence the measure of economic growth, where the increasing value of imports may cause the GDP to decline. Therefore, a country’s trade liberalization on the one hand would encourage increased trade value, but on the other, will affect the trade balance. Tables 1-3 show the Indonesia’s GDP (1999-2014), trade balance (2010-2014), and macroeconomic development indicators (2010-2013).


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Economically, international trade will also affect the aspects of consumption, production, and the distribution of income (Sjahril, 2013). This paper highlights the effect of international trade carried out by Indonesia on the welfare of the country. In theory, trade liberalization is hoped to establish efficient trade patterns based on the principle of comparative advantage. The adoption of the principle comparative advantage would increase the likelihood that a country will achieve greater economic prosperity through participation in foreign trade rather than through trade protection (Gilpin, 2001).

In a standard trade model, a country will gain from trade by specializing, producing, and exporting the goods that have comparative advantages. Conversely, the country is better to reduce the production and import of goods that do not have a comparative advantage (Berg, 2005, p. 330). This standard theory includes pros and cons. One of them is related to the argument in favor of the imposition of protection that may be necessary in certain cases. Conversely, many researchers have noted specific obstacles or situations of certaincountries that inhibit the growth of world trade (Kalirajan, 1999).

The theory of comparative advantage is not exclusive for encouraging development. Others theories include, the international product life cycle theory,the competitive advantage

theory, and hyper competitive theory. Of the three, the theory of competitive advantage is well-known,as espoused by Michael Porter where in the era of global competition, a country would

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be able to compete if it has dominant factors such as factor and demand conditions,related and

supporting industry,firm strategy structure and rivalry. Lately there appears to be the likelihood of competitive liberalization, which is a combination of the implementation of dynamic comparative

advantage theory to the theory of competitive advantage.

On the other hand, increasingly open trade policies as applied Indonesia today, has significantly increased the risk of external shocks on the domestic economy, particularly on the welfare of the Indonesian people. How much of an effect that will be distributed, and through which mechanisms, is an important empirical question to know, both for business and also for the government, especially in designing the policy. This is the background of this paper.

There are many studies that have been conducted on empirical research related to the impact of foreign trade and external shock on the well-being of the economy. Afonso (2001) explained that international trade is one important variable to economic growth in an economy. The same thing is also illustrated in a study conducted by Sun & Heshmati (2010) that contends that the openness of the economy in a country has a very significant effect on economic growth. This study explained China’s increasing international trade as rapidly increasing and contributing greatly to the economic growth of China. Furthermore, there was a study conducted by Daumal & Ã-zyurt (2011), which examined the impact of foreign trade on the economy of a country at the regional level. In his research, Brazil was studied and it was found that the impact of foreign trade openness had a positive effect on its regional economic growth in the 26 Brazilian states. But at the same time the gap between the states (regional disparities) in Brazil increased.

The second part of this paper outlines the theory and the foundation of thinking about how an external shock can have an effect on other economies. The third section presents the data and methodology used, while the fourth section presents the results of calculations and analysis. The fifth section presents the conclusions, recommendations, policy implications, and the concluding remarks of this paper.

II. THEORY

Studies related to the effect of foreign trade on domestic welfare has been done by previous researchers with different methods of assessment. Alesina et al (2005), in their study utilized econometric estimation methods 3SLS size to measure the economic effect where foreign trade, including free trade affected economic performance. Other studies such as Caliendo & Parro (2012) examined the economic impact of the North American Free Trade Area (NAFTA) and found that there was an increase in trade among members of NAFTA, but in terms of welfare change, where the US and Mexico was predicted to be better, Canada actually decreased. Foreign trade shock may also impact economic volatility and debt of an economy as described in the study of Eicheret al (2006). This study explained that the magnitude of the impact of foreign trade on the welfare of an economy depends on the size of a country’s dependence on the international capital markets.


Figure 1.Basic Pathway and Line Circuit

In evaluating the impact of foreign trade on the economy and welfare of the community, one of the devices that can be used is the path method (structural path analysis). Many past investigators have long been used structural path analysis (SPA). SPA is a method used to identify network and pathways that connects and influences a sector on other sectors in a socio-economic system. This concept of economic impact (economic influence) and structural analysis was developed by Lantner (1974) and Gazon (1976 and 1979). The effect of a sector to other sectors can be through a basic path (elementary path),i.e., if the line is through a sector of not more than one; and circuits tracks (circuit path),i.e., if a sector, after affecting the other sectors, will again affect the sector itself. Figure 1 presents an example of the basic paths and circuits.

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In Figure 1 (a), the effect of sector i to sector j can occur directly, and also through other sectors, such as x and y.Traveling along the pathfrom sector i to the sector j,i sector, sector x,y sector and the sector j is crossed once, then path like this is referred to as the basic path. Figure 1 (b) presents the circuit pathway, namely the effects of sector i to sector x, which is passed to sector y, to sector j, z and then returns to the sector i. Every sector of the line was passed only once, except the sector i, which is traversed twice, namely at the beginning and end of the track.

Furthermore, based on Figure 2, the magnitude of the effect of one sector to another or the relationship between the two sectors use the size of the average expenditure tendencies (average expenditure propensity). Other alternatives can use the size of the marginal expenditure propensity (expenditure marginal propensity).In the effect of sector i to sector j using the expenditure approach, the average propensity is represented by a ji,and the marginal expenditure propensity is represented by cij. In this study the effect of a sector to other sectors uses the average expenditure (spending) propensity approach. In the concept of influence in the SPA


analysis, there are three kinds of influence, namely direct influence (direct effect), the effect on the total economy (total effect) and global (global effect) (Isard et al., 1998).

2.1. Direct Effect

The direct effect of sector i to the sector j transmitted through a basic (elementary path) is the change in income or production that is transmitted to the sector j by changes in income or production in sector i by 1 (one) unit. The direct effect can be measured along the basic path that contains one arrow or more than one arrow.

2.2. Total Effect

The total effect of captures the direct influence along the path and the indirect influence of the circuit lines associated with the pathway. At a certain basic path p = (i, ..., j) with the beginning of sector i and ending at sector j, the total effect is the effect that is transmitted from sector i to sector j along the basic path p, including all the indirect effects.

Figure 2 presents the basic path p = (i, x, y, j) as shown in Figure 1, with the addition of an explicit circuit path. The direct effect between sector i and sector y is a xia yxwhich are then transmitted back from sectors y sectors x through the two loops, the first loop creates an effect onaxiayxaxyand a second loop to create an effect onaxiayxazyazx.. Flow (feedback) together from the two loops produce effects (axiayx)(axy + azyaxz).

Figure 2.Basic Pathwayincluding Line Circuits

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3. Global Effect

Global effect or global influence (GI) of node i to node j, measures the total impact on earnings or the output of node j that causes changes in income or unit output at node i. Global effect has the same value as the sum of all total effect along the base paths connecting node i and node j. In Figure 3, there are four basic paths that have an origin and the same direction from i to j, namely: (i, j), (i, x, y, j), (i, s, j) and (i, v, j). For simplification, the first path is symbolized with the number 1 and the next path as 2, 3, and 4.

Figure 3.Network Basic Line and Line Circuit Linking Nodes i and j

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In general, the global effect,which is the relationship between the two symbols on a structure, can be decomposed into a series total effects transmitted in each path and all the basic path vertexes i and j, namely:

where, I G(i-->j)is the global effect of the i-th column in the matrix of the SAM to the j-th

row; m aji are elements to (j, i) of the matrix multiplier balance Ma; I T

(i-->j)is the total effect of i to j; I D

(i-->j) is a direct effect from i to j; and Mp is a multiplier along the path p.

As previously explained, the multiplier analysis does not explain the mechanism of structural and behavioral responses to the global effects, which means there is a ’black box’. The SPA method opens the ’black box’, which cannot be explained by the magnitude of the multiplier (Defourny and Thorbecke, 1984). However, the main problem relating to the SPA is the number of pathways that is need to be identified in the overall economy (Hewings, Sonis and Lee, 1995).


2 The data used SAM 2008 considering there was no data recently issued by the BPS. Thus, this paper assumes no fundamental changes in the structure of international trade until 2008, a point at which Indonesia had not yet ratified the bilateral and multilateral free trade agreements.

III. METHODOLOGY

In order to evaluate the impact of foreign trade on the welfare of the Indonesian society world, this study utilizes two sets of analysis, i.e., the Indonesian2008 Social Accounting Matrix (SAM 2008) and Structural Path Analysis (SPA)2.SAM 2008 is used as it is the latest one issued by the Central Bureau of Statistics. SAM is a data system framework presented in the form of a matrix, which gives an overview of the economic and social conditions of society and the linkages between them in a comprehensive, consistent and integrated (Central Bureau of Statistics, 2010).

In the Indonesian SAM, all transactions related to trade abroad are summarized in the external balance sheet (rest of the world—ROW). As an integrated and comprehensive data system framework, SAM includes a variety of social and economic data that consistently ensures the balance of transactions for each balance sheet contained therein. SAM also is modular enabling it to connect a variety of economic and social variables, so that a relationship between these variables can be shown and described (Central Bureau of Statistics, 2010). The SAM matrix analyzed is 105x105 consists of 105 accounts and classifies Indonesia’s economic system into the four balance sheets, namely:

1. Balance Sheet Production Factors which consists of 17 classifications (16 labor classifications, and one non-labor).

2. Institutional balance sheet consisting of 10 classifications (8 household classifications, and the other are corporations and government).

3. Production Accounts (Activities) consisting of 74 classifications (the production sector, the domestic commodity, and commodity imports, each consisting of 24 classifications, as well as margin trading and transport).

4. Exogenous balance sheet consisting of four classifications (balance capital, indirect taxes, subsidies, and the balance of foreign affairs).

Shorthand definitions of coding and classification of business sectors and household labor were used for ease of analysis (see Table 4).


on the household can be seen more clearly. SPA is a method used to identify networks comprised of pathways that connect the effect of a sector on other sectors in the socio-economic system. In this study, the results of the discussion focuses on the initial SPA node, the injection of the main elements of potential sectors that effect the institution’s revenues through certain pathways.

Pathway analysis investigate the pathway (stream) traversed ranging from commodity exports or imports to have an effect (ending) on domestic institutions. Therefore, in this discussion the starting point (pole of origin) is set with the commodity exports or commodity imports that cause and lead to the ultimate goal (effect) on the domestic institutions. In addition, to further simplify the discussion, as previously described, only pathways with a global impact of

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at least 0.001 and have a total effect percentage at least 2.5% of the global effects (T / G) is calculated as the significant pathway of analysis (Defourney and Thorbecke, 1984). In addition only pathways that have the largest percentage (T / G)(or three greatest), would be analyzed further (Daryanto and Hafizrianda 2010; Azis and Mansury, 2003).

This analysis used the MATS 1:10 version software program for the pathway analysis on all sectors to see the direct, total and global effect, but given many pathways can be measured, the discussion focuses on the basic pathway that has the highest percentage of total effect to the global effect (T / G). The global effect percentage is from the global effect that also includes a measurement of the total effect. From each of the sectors analyzed and have an effect on domestic groups, the use of the global effectis also applied in determining the basic pathway that has the highest effect on certain household groups.

IV. RESULTS AND ANALYSIS

4.1. Pathway Injection Analysis of Commodity Exports on Community Welfare (Household Income)

In general, export activity will have an effect on the welfare of society through the production sector, once it goes through the factors of production (labor or capital) and then endsat households. Therefore, the effect of commodity exports on labor / capital can be seen in this analysis, and how much it effects household income.

In addition, not all sub-sectors results were analyzed, with the exception of only a few export commodities of the manufacturing sub-sectors that have a significant effect to change Indonesia’s trade with the world (rest of the world). In general, commodity exports are derived from the domestic commodity product, so the automatic image of the structural pathway with corresponding codes between sectors and domestic products is summarized using only one code for its point of origin. Households are the seen as the point of destination for the domestic product and employment. Although the tabulated results are presented in the domestic product pathways, what is presented in the structural pathways image is labor that then radiates to household groups.

Commodity Industries of Food, Beverages and Tobacco

The food, beverages and tobacco industries have a large effect on commodity exports, particularly for urban low-income households, which is the largest group with the highest percentage of global effects (14.5%). This value through with a multiplier effect 1823 is associated with low-income city work. Nevertheless, the greatest multiplier effect (2878) did not come from this pathway, but instead through low-income village work. This suggests that the effect of the export of this commodity influences village work more, but in the aggregate, urban households receive more revenue (see Table 5 and Figure 4).


Commodity Industries of Spinning,Textiles,Clothing and Leather

Exports of industrial commodities such as (thread) spinning, textile, clothing and leather effected upper middle-income households in the city by 32.3% of global securities through capital (not labor), and also along this pathway medium income village households accounted for 24.7% of the global effects. Plus radiating the farm work households, it appears that the capital pathway had the greatest effect on the commodity industry exports of spinning, textile, clothing, leather. Comparing labour pathways that only radiate to one or two households, except to low-income city work (code 6), the pathway through which capital moves provides a Broader effect concerning income changes to entire household group (see Table 6 and Figure 5)

Figure 4. Export Commodity Pathways of the Food, Baverages and Tobacco Industries on Labour and Households by

Classification

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Commodity Industries of Wood & Articles of Wood

As with the spinning and textile industry, the commodity exports for timber the industry and wooden goods also had the highest effect through capital, but the pathway was radiating into non-agricultural low-income city households. The multiplier effect of this pathway was also the largest in addition to the global percentage effect. The effect of commodity exports of industrial wood and articles of wood in the aggregate illustrates that the low-income city households groups were the most affected (see Table 7 and Figure 6)

Figure 5. Export Commodity Pathways of the Spinning, Textiles, Clothing and Leather Industries on Labour and

Households by Classification

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Commodity Industriesof Paper, Printing, Transport and Metals Manufacturing

The effect of commodity exportsof paper, printing, transport equipment and metal goods and industry to low-income city households was through low income city businesses that had the largest percentage of global effects (40.8%). However, this pathway had a multiplier effect that was not the greatest compared to the others in the group over the course of other labor or capital. So a conclusion can be drawn, that despite the low income city businesses having the highest global effect, it was still less powerful than the effects of capital and labour on low-income citywork that has the largest effect on upper middle-income city households, the upper-middle village households, and city low-income households (Table 8 and Figure 7).

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Figure 6. Export Commodity Pathways of the Wood and Articles of Wood Industries on Labour and Households by

Classification

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Figure 7. Export Commodity Pathways for the Paper,Printing, Transport and Metals Manufacturing

IndustriesonLabour and Household by classification

Commodity Industries of Chemicals, Fertilizer, Clay Products and Cement

On the export commodity industries for chemical, fertilizer, the clay products and cement industries, households by income groups had the same effect with respect to the proportion either along the labor pathway or capital pathway from the point origin to points of destinations. But the labour (work force)is in the top three positions according to the percentage of its global effect, while the capital is in the next three positions. However, if viewed from the entire path, it is seen thatthe labor effects are only partial, and did not spread to the entire group of households, while effects through the capital actually spread throughout the household group.Once again for this commodity, the global effects tend to be received by low-income households in urban and rural areas, while work that has the largest global effect was household agricultural work (Table 9 and Figure 8).

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Based on the results of the structural path analysis of the manufacturing commodity groups as described above, it can be said that in general,all commodities (and goods) are involved in the labor and capital pathway. A difference is seen with the agricultural groups which is dominated by the labour pathway, while the industrial groups are affected through the capital and labor pathways, where capital dominates with a multiplier effect that tend to be larger than labour (see Figure 9).

From this, it can be summarized that where labour has an effect, and the households that were affected by exports, tended to be the rural low-income household group for agriculture and the urban low-income household group for the industry. The capital pathway has a strong influence on household income in both the rural and urban areas. Pathways of capital cannot be detected because the owners of the capital were not known in the SAM data. However, given the conditions of the country where the economy is partly driven by urban business/entrepreneurs and even by foreign businesses, the commodity export industry is certainly strongly influenced by the owners of capital.

Figure 8. Export Commodity pathways of the Chemicals, Fer-tilizer, Clay Products, and Cement Industries on Labour and

Households by classification

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Figure9.Injection Effect Pathways to Household Commodity Exports

4.2. Analysis of Import Commodity Shock to Public Welfare (Household Income)

Based on the results of the MATS program, there are 168 pathways in accordance with the criteria set forth at the beginning of this section (i.e., the starting point is from the imported commodities and ends up in institutional households that has a global effect of at least 0.001 and the percentage minimal 2.5% (T / G). To further simplify the analysis, all of the starting points (for imported commodities) target the households on the same path having the largest global percentage (T / G). It was found there were 83 pathways that met this criteria in which the general path traversed can be divided into two paths as shown in Figure 10. These pathways are through the (i) trade sector, and (ii) tax revenues.

(i) The trade sector path goes through production factors before finally reaching institutional households.

The trail of this path has a length (path length) of the five, which means the start of the commodities imported to households is through five lanes. The early stages of this pathway indicates that an imported commodity is a commodity for resale without further processing. It can be seen from the path traversed through margin trading before resale on the domestic market (as a domestic commodity trade) and as a source of income for the trade sector. Through the trade sector, imported commodities are used by the production sector as implicitly portrayed through the factors of production (in this case labour - both as workers

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and employers – which are used by the production sector in the production process to produce the final output). The production factors involved in this process consists of urban middle-income work and rural middle-income business. Revenues earned from the factors of production are then reflected in the next path in the form of institutional households composed of Farmer Households and Non-Agricultural Households in both rural and urban areas, respectively.

(ii) The path of tax revenues is accepted by the Government before finally reaching institutional households.

Tax revenues have a length of three. From Figure 10 it can be seen that commodity imports in this pathway are taxable (rates), which becomes revenue for the Government. The funds obtained from this tax are then given as program aid / grants provided by the Government and accepted by households who deserve it, in this case both rural and urban low income (poor) agricultural households and non-agricultural households.

Figure 10.Commodity Import Pathway Effects to Domestic Institutions

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Table 10 summarizes effects pathway range (maximum and minimum) of the main pathway through which imported commodities start and ends at domestic institutions. From this table it is shown that the dominant effects of commodity imports entered through trade, was mostly from the agriculture sector, while the dominant effects of commodity imports through tax revenue was primarily from agriculture and industry.


V. CONCLUSION

This study performed an evaluation of the possible effects of foreign trade on the welfare of Indonesian society world. To evaluate the effect of foreign trade on the welfare of Indonesian society, this study utilizes analytical tools such as Structural Path Analysis (SPA) and the Social Accounting Matrix (SAM 2008).

The analysis of export commodities looked at the injection pathway that effects the welfare of society (household income). Based on a structural path analysis of the commodity groups Agriculture and Industry, it can be said that in general commodities forall goods involved labor and capital pathways. The difference is that for the agriculture group, the pathway was predominantly through employment, while for the industry group the pathways were through the capital and labor, where the capital dominated with a multiplier effect that tends to be greater than labor. Labor that was affected and households that were affected by domestic export activities,were rural low-income household groups for agriculture, and urban low-income household groups for industry. The capital pathway had a strong influence on household income in both rural and urban areas.

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The pathway analysis of shocks from imported commodities to the welfare of society were based on pathways through trade, and commodity imports used by other production sectors was simplicitly through factors of production. The factors of production involved in this process consisted of urban middle income work and rural and urban middle income work. Factors of production revenues earned were then reflected in the next path, i.e. households consisting of Farmer Households and Non-Agricultural Households in both rural and urban areas. The analysis of pathways through tax revenues taken by the Government before finally reaching households. It can be seen that the imported commodity in this pathway are taxable (rates) for government revenues. The funds obtained from this tax are then given as program aid / grants provided by the Government to households that deserve it (in this case both rural and urban low income (poor) agricultural households and non-agricultural households.

In policy advice, the Government would be able to provide assistance in improving the ability of competitiveness ( supply-side ) such as capacity building for non-farmlow income households (RTM) both in rural and urban areas as well as farm work households so that the future distribution of welfare or revenue to all types of households can be achieved. Further, based on the contribution of the primary and manufacturing sub-sectors to increase people’s income, the Government ought to consider policy directions and development strategies to assist the production sector through aid (e.g., through the strengthening of the allocation of funding and other support) to the sub-sectors (based on the priority / ranking ) as follows: 1) Industrial Chemicals, Fertilizers, results of Clay, Cement (subsector 12); 2) Manufacture of Food, Beverages and Tobacco (subsector 08); 3) Industry Paper, Printing, Transport and Metals Manufacturing and Industries (subsector 11); 4) Other Crop Farming (subsector 2); and 5) Spinning industry, Textiles, Clothing and Leather (subsector 09). This would be done to continue to strengthen the competitiveness of Indonesian products and ultimately contribute greatly to the household income of Indonesia.

The injection of export commodities from the chemical, fertilizer, clay products, and cement industries provides the largest global effect on low-income households in urban and rural areas. But the path was not labor (capital) which provides the greatest multiplier to RT Farmers Entrepreneurs and urban low RTBT. So in this case, the Government would be able to provide assistance through capital funding support so that in addition to providing the greatest multiplier, income generation can also be achieved. The injection of food, beverages and tobacco commodity exports has the largest percentage global effect that contributes to the low-income urban household group (RTBT Minim City) through the low-income work in the city. But it has the biggest multiplier effect through the low-income rural work. Therefore, the Government would be able to provide support by way of increasing employment to workers in low-income rural areas because this group provides the greatest multiplier effect of increased revenue (RTBT Minim village) and could ultimately encourage the achievement of equitable distribution of income / welfare in society.


The injection of Paper Industry, Printing, Transport and Metals Manufacturing and Industry commodity exports contributes the largest percentage of global effects to urban low-income households (RTBT Low City) through lower employers in the city. But it has the biggest multiplier effect through the low income work in the city. Therefore, the Government would be able to provide support by way of increasing employment to the city’s low income workers for this group which provides the greatest multiplier effect to increase RTBT Minim City revenue and could ultimately encourage the achievement of equitable distribution of income / welfare in society.

The injection of other Agricultural export commodities provides the greatest global effect to the Household Agricultural Workers (RT Peasants) from the path of Agriculture workforce Wages Receiver and Village Salaries (Peasants ‘Village) and the City Peasants. The direct effect is emitted through rural farm laborers as it has the biggest multiplier effect given, not labor. So in this case, the Government if it can,ought to support the provision of incentives and increased employment to farm village work.

The injection of Spinning industry, Textiles, Clothing and Leather export commodities gave the greatest percentage of global effect to urban upper middle-income families (RTBT Intermediate upwards City), followed by rural upper middle-income families (RTBT Intermediate upwards Village), household and farm workers (RT peasants) and all through capital (not labor). Yet it is precisely through the Low Rural Entrepreneurs who hada high multiplier effect to RTBT Minim village. So in this case, the Government, if it can, ought to provide support through the provision of incentives and increased employment to low income village businesses.


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