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Governance and Poverty Reduction: Evidence from Newly Decentralized Indonesia


  • Sumarto, Sudarno
  • Suryahadi, Asep
  • Arifianto, Alex


This study is the first attempt to systematically examine the impact of bad governance practices in Indonesia on poverty reduction. Indonesia is a country that has endured bad governance for a long period, but also has sustained significant poverty reduction. Prior to the onset of the economic crisis in mid 1997, the problem of bad governance in Indonesia was apparent but mostly ignored because it was compensated by high economic growth. The advent of the economic crisis, however, has highlighted the seriousness of the problem. This study focuses on the impact of bad governance on the poor, the people who are most vulnerable to the impact of bad governance. By assembling scattered anecdotal evidence on how past and current practices of bad governance in Indonesia have hurt the poor, this study shows that the adverse impact of bad governance on the poor is real, systematically affects many people, and undermines the efforts to reduce poverty in the country. More systematic evidence on how bad governance affects poverty reduction indicates that indeed regions that practice better governance experience faster poverty reduction and vice versa.

Suggested Citation

  • Sumarto, Sudarno & Suryahadi, Asep & Arifianto, Alex, 2003. "Governance and Poverty Reduction: Evidence from Newly Decentralized Indonesia," MPRA Paper 58023, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:58023

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    References listed on IDEAS

    1. Roger Montgomery & Sudarno Sumarto & Sulton Mawardi & Syaikhu Usman & Nina Toyamah & Vita Febriany & John Strain, 2002. "Deregulation Of Indonesia'S Interregional Agricultural Trade," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(1), pages 93-117.
    2. Natasha Hamilton-Hart, 2001. "Anti-Corruption Strategies In Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(1), pages 65-82.
    3. Pradhan, Menno & Suryahadi, Asep & Sumarto, Sudarno & Pritchett, Lant, 2000. "Measurements of poverty in Indonesia - 1996, 1999, and beyond," Policy Research Working Paper Series 2438, The World Bank.
    4. Asep Suryahadi & Sudarno Sumarto & Lant Pritchett, 2003. "Evolution of Poverty During the Crisis in Indonesia," Asian Economic Journal, East Asian Economic Association, vol. 17(3), pages 221-241, September.
    5. Stephen Sherlock, 2002. "Combating Corruption in Indonesia? The Ombudsman and the Assets Auditing Commission," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(3), pages 367-383.
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    Cited by:

    1. Sumarto, Sudarno & Vothknecht, Marc & Wijaya, Laura, 2014. "Explaining the Regional Heterogeneity of Poverty: Evidence from Decentralized Indonesia," MPRA Paper 57823, University Library of Munich, Germany.
    2. Zainab Akram & Sajida Wajid & Tahir Mahmood & Shoaib Sarwar, 2011. "Impact of poor governance and income inequality of poverty in Pakistan," Far East Journal of Psychology and Business, Far East Research Centre, vol. 4(4), pages 43-55, September.
    3. Lawrence Sáez, 2013. "Methods in governance research: a review of research approaches," Global Development Institute Working Paper Series esid-017-13, GDI, The University of Manchester.

    More about this item


    Governance; corruption; poverty; Indonesia.;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • K2 - Law and Economics - - Regulation and Business Law


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