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Explaining the Regional Heterogeneity of Poverty: Evidence from Decentralized Indonesia

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  • Sudarno Sumarto
  • Marc Vothknecht
  • Laura Wijaya

Abstract

This study presents evidence from Indonesia on how the country’s recent periods of economic growth have contributed to poverty reduction at the regional level, with a particular emphasis on the role of decentralization. Over the past decade Indonesia has made significant progress in reducing poverty, from 23% of the population in 1999 to less than 12% in 2013. However, substantial differences in regional poverty are observed. In this paper, we discuss the factors that drive the evolution of poverty in a decentralized Indonesia, and relate kabupaten (district) performance in poverty reduction to a wide range of social, economic, and political characteristics within the area. The study finds gross domestic product (GDP) percapita to be one of the major driving forces behind the decline in regional poverty. Additionally, results from a panel data analysis covering the period of 2005 to 2010 show that poverty has decreased in particular in those kabupaten with (i) a larger share of local leaders with secondary education; (ii) a higher average educational attainment; (iii) an established local office for the coordination of poverty reduction initiatives (TKPKD); (iv) a higher share of fiscal revenues; and (v) a higher share of urban population. Furthermore, there appears to be a positive link between regional inequality and poverty, suggesting that a successful poverty reduction strategy requires both economic growth and sound social policies.
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  • Sudarno Sumarto & Marc Vothknecht & Laura Wijaya, "undated". "Explaining the Regional Heterogeneity of Poverty: Evidence from Decentralized Indonesia," Working Papers 276, Publications Department.
    • Handle: RePEc:agg:wpaper:276
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    References listed on IDEAS

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    Cited by:

    1. Harold Alderman & Ugo Gentilini & Ruslan Yemtsov, 2018. "The 1.5 Billion People Question," World Bank Publications - Books, The World Bank Group, number 27907, December.
    2. Wulung Hanandita & Gindo Tampubolon, 2016. "Multidimensional Poverty in Indonesia: Trend Over the Last Decade (2003–2013)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(2), pages 559-587, September.
    3. Hal Hill, 2020. "Indonesian Living Standards over 50 Years: A Multidimensional Analysis," Asian Economic Journal, East Asian Economic Association, vol. 34(3), pages 249-274, September.
    4. Julien Hanoteau, 2023. "Do foreign MNEs alleviate multidimensional poverty in developing countries?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 719-749, December.
    5. Timmer, Peter C. & Hastuti, Hastuti & Sumarto, Sudarno, 2016. "Evolution and Implementation of the Rastra Program in Indonesia," MPRA Paper 81018, University Library of Munich, Germany, revised 30 Sep 2017.
    6. International Food Policy Research Institute, 2015. "Global Nutrition Report: Actions and Accountability to Accelerate the World’s Progress on Nutrition," Working Papers id:7417, eSocialSciences.
    7. International Food Policy Research Institute, 2014. "Global Nutrition Report 2014: Actions and accountability to accelerate the world’s progress on nutrition," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-89629-564-3.

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    More about this item

    Keywords

    poverty; decentralization; economic growth; Indonesia;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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