Indonesia | Economics

Sunday, December 09, 2007

Do supermarkets harm traditional markets?

Not according to this not-so-new report by SMERU:
This study measures the impact of supermarkets on traditional markets in urban centers in Indonesia quantitatively using difference-in-difference and econometric methods as well as qualitatively using in-depth interviews. The quantitative methods find no statistically significant impact on earnings and profit but a statistically significant impact of supermarkets on the number of employees in traditional markets. The qualitative findings suggest that the decline in traditional markets is mostly caused by internal problems from which supermarkets benefit. Therefore, ensuring the sustainability of traditional markets would require an overhaul of the traditional market management system, enabling them to compete with and survive alongside supermarkets.

Note that the one statistically significant negative impact of supermarkets was to reduce employment in the traditional markets. However, since supermarkets create employment, I wonder whether the net employment impact is positive or negative.

The report looks comprehensive and I think it deserves a wider coverage in the conventional media. I sure wish SMERU has an Indonesian version of it. Who knows, Indonesian journalists might actually take a look at and investigate the (absence of) empirical evidence behind the case against modern markets, instead of just parroting the anecdotal arguments of the traditional-market lobbies.

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3 Comments:

  • Hi Arya,

    Thanks for covering the report in this blog. Yes, an Indonesian version is coming soon, along with a policy brief. BTW, the newsletter version (which is bilingual) is already up on the SMERU web.

    By Blogger Daniel Suryadarma, at 1/13/2008 10:47:00 pm  

  • This report is not intellectually honest, read it carefully.
    They say that the street vendors are the main problem of traditional markets. But the number of traditional traders who have left the market to go sale in the street is really high in Jakarta. Because they got less customers (from - 40 to 50% since 2003, according to this study), they got less income. And where PD Pasar Jaya have renovated the market, they have raise the price of kios so much traders cannot afford it.

    Of course their is problems in the management of the traditionnal markets. But despite those problems, trad markets have well good survived until super and hypermarkets come.

    And the idea of better price in supermarket is not true in the Indonesian context. IN general, fresh produces like fruits, vegetables and fish are less expensive in the traditionnal markets. So if those markets disappear, where poorer people will go?

    Supermarket are more competitive not for an economic factor, but the reason is cultural : High and middle class as well as young people want to go there because they think that is part of a modern life and it's fashion. Capitalism western culture is colonising the consuption in Indonesia.

    Supermarkets import around 60% of their stuffs, but it's only 3% for traditional markets. By going make their grocery in supermarkets, Indonesia people choose to buy fruits from another country instead of fruits from Indonesia. This is a non sense.

    So if there is less trad markets, where do indonesian families farmers will sale their production?

    In the middle and long term, this phenomena will destruct the family agricultural base of Indonesia and the Indonesia's autonomy in the foods sector.

    And the idea to include Indonesian farmers in the provision chains of supermarkets is another western shit (I'm canadian, I know what I'm talking about). We know that mass over consuption is destructing actually our precious Earth : Farmers who sales to those chains have to produce a lot, waste a lot, use a lot of pesticide and other kimia.

    Please, let down the neoliberal rhetoric of western economist. It seems to be scientific, but it's absolutly not. If their is people really really rich in an limited resources world, so those resources are not equally distributed, so their is many people poor.

    Marie-Sophie
    Montreal, Canada

    By Anonymous Anonymous, at 4/19/2009 06:22:00 pm  

  • Marie-Sophie:

    It's been a while since I read the report, but I've forwarded your comments to one of the report's authors, so he'll reply in due time.

    Meanwhile, let me raise a different issue: It seems you have the same "colonizing mindset" of your so-called "western culture" when you wrote:

    "High and middle class as well as young people want to go there because they think that is part of a modern life and it's fashion."

    Are you implying that these middle-and-high class Indonesians are simple (read: dumb) victims of fad (instead of rational people who see the economic values offered by modern markets). Care to back it up with any empirical evidence?

    By Blogger Arya Gaduh, at 4/19/2009 06:50:00 pm  

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