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Trends in Poverty and Inequality in Decentralising Indonesia

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Author Info

  • Riyana Miranti
  • Yogi Vidyattama
  • Erick Hansnata
  • Rebecca Cassells
  • Alan Duncan

Abstract

As one of the world’s largest emerging economies, Indonesia has experienced rapid economic growth and substantial reduction of poverty over the past three decades, particularly prior to the 1997-98 Asian Financial Crisis. After the crisis, Indonesia entered a new development phase that saw the fall of the Suharto government and new governance which moved highly centralised policies and powers towards a decentralised process. This research report analyses economic and social patterns and trends of poverty and inequality in Indonesia with a particular focus on the decentralisation period from 2001 to 2010.The Indonesian political and economic environment has changed significantly during this period and this had implications for individual wellbeing, regional economic prosperity and national economic growth. The report finds that in general, absolute poverty rates have continued to decline during the decentralisation period although the reduction has not been as strong as it was prior to the Asian economic crisis. In contrast, consumption inequality has increased during the same period. New estimates of growth and inequality elasticity of poverty suggest that this rising inequality has been offsetting the positive benefits of consumption growth on poverty. En tant que l'une des plus grandes économies émergentes du monde, l'Indonésie a connu une croissance économique rapide et une réduction substantielle de la pauvreté au cours des trois dernières décennies, en particulier avant la crise financière asiatique de 1997-1998. Après cette crise, l'Indonésie est entrée dans une nouvelle phase de développement qui a vu la chute du gouvernement Suharto, et qui a connu une nouvelle gouvernance délaçant des politiques et des pouvoirs fortement centralisés vers un processus décentralisé. Ce rapport analyse les caractéristiques et tendances économiques et sociales de la pauvreté et de l'inégalité en Indonésie, avec un accent particulier sur la période de décentralisation de 2001 à 2010. L’environnement politique et économique indonésien a considérablement changé au cours de cette période. Cela a eu des répercussions sur le bien-être individuel, la prospérité économique régionale et à la croissance économique nationale. Le rapport constate qu'en général, les taux de pauvreté absolue ont continué à baisser au cours de la période de décentralisation, mais la baisse n'a pas été aussi forte qu'elle l'avait été avant la crise économique asiatique. En revanche, les inégalités (mesurées par la consommation) ont augmenté durant la même période. Des nouvelles estimations de la croissance et de l'élasticité de l'inégalité de la pauvreté suggèrent que cette inégalité croissante a compensé les effets positifs de la croissance de la consommation sur la pauvreté.

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File URL: http://dx.doi.org/10.1787/5k43bvt2dwjk-en
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Social, Employment and Migration Working Papers with number 148.

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Date of creation: 23 Jul 2013
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Handle: RePEc:oec:elsaab:148-en

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Keywords: poverty; regional disparities; poverty alleviation strategy; inequality;

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Cited by:
  1. Facundo Alvaredo & Leonardo Gasparini, 2013. "Recent Trends in Inequality and Poverty in Developing Countries," CEDLAS, Working Papers, CEDLAS, Universidad Nacional de La Plata 0151, CEDLAS, Universidad Nacional de La Plata.
  2. Andy Sumner, 2014. "Who are likely to be the future poor in Indonesia? Evidence on primary school non-completion from six rounds of the Demographic and Health Survey, 1991-2012," Working Papers in Economics and Development Studies (WoPEDS) 201406, Department of Economics, Padjadjaran University, revised May 2014.

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