Siti Hadijah Che Mat

Does non-farm income improve the poverty and income inequality among agricultural household in rural Kedah?

Abstract This paper used a primary data collected through a surveys among farmers in rural Kedah to examine the effect of non farm income on poverty and income inequality. This paper employed two method, for the first objective which is to examine the impact of non farm income to poverty, we used poverty decomposition techniques- Foster, Greer and Thorbecke (FGT) as has been done by Adams (2004). For the second objective, which is to examine the impact of non farm income to income inequality, we used Gini decomposition techniques. Our result indicate that non farm income can improve the level of poverty or non farm income sources contributed towards poverty reduction among agricultural household. All of the poverty measures show that the inclusion of non-farm income into the agricultural household income reduce the level, depth and severity of poverty. But on the other hand, non farm income increased income inequality among agricultural household in Kedah. As expected agricultural income is the main source of income for rural people in the study area. The policy implication of this study is to encourage non-farm income activities among agricultural households as this would raise their income and hence, reduce poverty among them. However, it should be focused on value-added activities, especially on the lower income group.

MACROECONOMIC INSTABILITY AND FISCAL DECENTRALIZATION: AN EMPIRICAL ANALYSIS

The main objective of this paper is to fill a critical gap in the literature by analyzing the effects of decentralization on the macroeconomic stability. A survey of the voluminous literature on decentralization suggests that the question of the links between decentralization and macroeconomic stability has been relatively scantily analyzed. Even though there is still a lot of room for analysis as far as the effects of decentralization on other aspects of the economy are concerned, we believe that it is in this area that a more thorough analyses are mostly called for. Through this paper, we will try to shed more light on the issue notably by looking at other dimension of macroeconomic stability than the ones usually employed in previous studies as well as by examining other factors that might accentuate or diminish the effects of decentralization on macroeconomic stability. Our results found that decentralization appears to lead to a decrease in inflation rate. However, we do not find any correlation between decentralization with the level of fiscal deficit. Our results also show that the impact of decentralization on inflation is conditional on the level of perceived corruption and political institutions.

Public Expenditure Expansion and Inter-ethnic and Rural-urban Income Disparity

Abstract This paper explores empirically the impact of public expenditure expansion in reducing inter-ethnic and rural-urban income disparity. The impact is examined within the context of a Social Accounting Matrix (SAM) based fixed price multiplier model. Generally the results show that public expenditure expansion has improved income inequality in Malaysia. The public expenditure expansion significantly improved the distribution of income across different household groups where it reduced both the Malay-Chinese and Malay-Indian income inequality as well as reduced income disparity between rural and urban areas. However, the improvement in income inequality is much larger in the Eight Malaysia Plan than the Ninth Malaysia Plan. This could reveal that the public expenditure expansion in the Eight Malaysia Plan gave more opportunities to the Malay to increase their income. It could also indicate that there were differences in the pattern or composition of the public sector expenditure in both plans that had influenced income distribution among the household sector which result a more significant success in the Eight Malaysia Plan. This then lead to suggest further investigation on the impacts of the various components of the public expenditure on the different household groups.