For Indonesia it was possible to construct a full variable set for eight regions for the 1971-1990 period. Table 12.1 provides a definition of each variable used in the analysis. Variables are identified as endogenous or exogenous.
The endogenous variables include each of the five crop loss variables, pesticide use, and a cumulated index of rice total factor productivity. The pesticide variable is treated as an independent determining variable. Thus a simultaneous equations estimation procedure is required. The procedure utilized is two-stage least squares (2SLS).
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