Household nutritional intake and trade reform in Indonesia

The debate on trade policy (in particular, trade liberalisation) has so far been limited to welfare measures in terms of contribution to economic growth, impacts on productivity, and wage skill premium, as well as to the distributional consequences of such policy in terms of who wins and who gains from it. This project aimed to further this debate to the area of health. In particular, it explored how trade reform can affect household nutritional intake. In doing so, researchers studied the causality from trade exposure to attitude towards nutritional consumption, controlling for idiosyncratic factors in household as well as in regional levels.

The research aimed to investigate the extent to which trade reform (e.g. tariff reductions) has an impact on household health quality, as proxied by nutritional consumption. The project also explored the heterogeneity in district levels on household responses to central government policy.

The research took datasets from the Indonesian Socio-economic survey (SUSENAS) in 1999, 2005, and 2011 and analysed detailed household consumption patterns. The main method employed was the pseudo-panel approach to examine variations between and within different data periods and regional groupings (district level).

In particular the research explored how different tariff regimes correlated with household nutritional intakes, or probabilities of a household being undernourished. The study then sought the extent to which causalities might exist. The working hypothesis of the research was that household exposure to trade (i.e. living in an environment where daily consumption is affected by prices in other countries) can influence how the members of a household behave in their consumption. This includes nutrition, hence affecting the state of health in the household.

Researchers found an indication of negative correlation between tariffs in output market and nutritional intake, but positive association between input tariff and nutritional intake. The net effect will depend on the actual tariff imposed in either or both markets.