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Economic growth and poverty reduction in Indonesia before and after the asian financial crisis

Author

Listed:
  • Asep Suryahadi
  • Gracia Hadiwidjaja
  • Sudarno Sumarto

Abstract

This paper assesses the relationship between poverty reduction and economic growth in Indonesia before and after the Asian financial crisis. The annual rate of poverty reduction slowed significantly in the post-crisis period. However, the trend in the growth elasticity of poverty indicates that the power of each percentage point of economic growth to reduce poverty did not change much between the two periods. In both, service sector growth made the largest contribution to poverty reduction in both rural and urban areas. Industrial sector growth largely became irrelevant for poverty reduction in the post-crisis period even though the sector contributed the second-largest share of GDP. Agricultural sector growth, mean-while, remained important, but in rural areas only. The findings suggest the need to formulate an effective strategy to promote sectoral growth in order to speed up the pace of poverty reduction.

Suggested Citation

  • Asep Suryahadi & Gracia Hadiwidjaja & Sudarno Sumarto, 2012. "Economic growth and poverty reduction in Indonesia before and after the asian financial crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 48(2), pages 209-227, August.
  • Handle: RePEc:taf:bindes:v:48:y:2012:i:2:p:209-227
    DOI: 10.1080/00074918.2012.694155
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    References listed on IDEAS

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    1. Hyun H. Son & Nanak Kakwani, 2004. "Economic growth and poverty reduction: initial conditions matter," Working Papers 2, International Policy Centre for Inclusive Growth.
    2. Hill,Hal, 2000. "The Indonesian Economy," Cambridge Books, Cambridge University Press, number 9780521663670.
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    Citations

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    Cited by:

    1. Shrestha, Rashesh & Coxhead, Ian, 2018. "Export boom, employment bust? The paradox of Indonesia's displaced workers, 2000-14," CEI Working Paper Series 2018-6, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    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.
    3. Takahiro Akita & Ni Made Inna Dariwardani, 2013. "Chronic and Transient Poverty in Indonesia: A Spatial Perspective with the 2008-2010 Susenas Panel Data," Working Papers EMS_2013_19, Research Institute, International University of Japan.
    4. Dartanto, Teguh, 2013. "Why is growth less inclusive in Indonesia?," MPRA Paper 65136, University Library of Munich, Germany, revised 2014.
    5. repec:blg:journl:v:13:y:2018:i:3:p:63-73 is not listed on IDEAS
    6. repec:eee:eneeco:v:68:y:2017:i:c:p:548-565 is not listed on IDEAS
    7. Andy Sumner & Peter Edward, 2013. "From Low Income, High Poverty to High-Income, No Poverty? An Optimistic View of the Long-Run Evolution of Poverty in Indonesia By International Poverty Lines, 1984–2030," Working Papers in Economics and Development Studies (WoPEDS) 201310, Department of Economics, Padjadjaran University, revised Jun 2013.
    8. Sumarto, Sudarno & de Silva, Indunil, 2014. "Beyond the Headcount: Examining the Dynamics and Patterns of Multidimensional Poverty in Indonesia," MPRA Paper 60379, University Library of Munich, Germany.
    9. Nazeem ud din & Khalid Zaman & Shagufta Ashraf & Faiza Sajjad & Sundas Saleem & Uzma Raja, 2015. "Quality versus quantity in health care and educational reforms: combating poverty," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(1), pages 267-293, January.
    10. Dutu, Richard, 2016. "Why has economic growth slowed down in Indonesia? An investigation into the Indonesian business cycle using an estimated DSGE model," Journal of Asian Economics, Elsevier, vol. 45(C), pages 46-55.
    11. Indunil De Silva & Sudarno Sumarto, 2014. "Does Economic Growth Really Benefit the Poor? Income Distribution Dynamics and Pro-poor Growth in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(2), pages 227-242, August.
    12. Arief Anshory Yusuf & Andy Sumner & Irlan Adiyatma Rum, 2014. "Twenty Years of Expenditure Inequality in Indonesia, 1993-2013," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(2), pages 243-254, August.
    13. Sumarto, Sudarno & de Silva, Indunil, 2013. "Poverty-growth-Inequality Triangle: The Case of Indonesia," MPRA Paper 57135, University Library of Munich, Germany.
    14. Muhammad Khan & Muhammad Khan & Khalid Zaman & Muhammad Khan, 2014. "The evolving role of agricultural technology indicators and economic growth in rural poverty: has the ideas machine broken down?," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(4), pages 2007-2022, July.
    15. Andy Sumner, 2013. "The Evolution Of Education And Health Poverty During Economic Development:The Case Of Indonesia, 1991–2007," Working Papers in Economics and Development Studies (WoPEDS) 201311, Department of Economics, Padjadjaran University, revised May 2013.
    16. Agus Surachman & Hartoyo, 2015. "Parental Investment and Poverty Dynamics in West Java, Indonesia," Journal of Family and Economic Issues, Springer, vol. 36(3), pages 340-352, September.
    17. Thath, Rido, 2016. "The Impact of Agricultural Land and Labor Productivity on Poverty: The Case of Rice Farming Households in Cambodia," MPRA Paper 70920, University Library of Munich, Germany.
    18. Sumarto, Sudarno & De Silva, Indunil, 2014. "Being Healthy, Wealthy, and Wise: Dynamics of Indonesian Subnational Growth and Poverty," MPRA Paper 57824, University Library of Munich, Germany.
    19. Indunil De Silva & Sudarno Sumarto, 2015. "Dynamics Of Growth, Poverty And Human Capital: Evidence From Indonesian Sub-National Data," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(2), pages 1-33, June.
    20. Shahbaz, Muhammad & Solarin, Sakiru Adebola & Hammoudeh, Shawkat & Shahzad, Syed Jawad Hussain, 2017. "Bounds Testing Approach to Analyzing the Environment Kuznets Curve Hypothesis: The Role of Biomass Energy Consumption in the United States with Structural Breaks," MPRA Paper 81840, University Library of Munich, Germany, revised 07 Oct 2017.

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