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Targeted Programs in an Economic Crisis: Empirical Findings from Indonesia’s Experience

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  • Pritchett, Lant
  • Sumarto, Sudarno
  • Suryahadi, Asep

Abstract

In response to the economic, natural, and political crisis that enveloped Indonesia from August 1997 (beginning of depreciation) to May 1998 (resignation of Soeharto), the new government announced support for a set of “safety net” (JPS) programs in July 1998 budget. These included: (a) targeted sales of subsidized rice, (b)work creation programs, (c) scholarships to students and block grants to schools, (d)targeted health care subsidies, (e) community block grants. We used cross sectional and panel data to examine the targeting of these programs. First, “static participation incidence” (the relationship between program participation and household consumption expenditures) was substantially better than a uniform transfer, but substantially worse than perfect targeting --and remarkably similar for all of the JPS programs. Second, unlike standard static incidence measures, what we define as dynamic participation incidence — the relationship between changes in consumption expenditures and program participation — was very different between the JPS programs. The employment creation programs which relied on self-selection targeting was much more likely to reach those households with large shocks to their expenditures than programs based on administrative targeting such as subsidized rice sales, scholarships, and health subsidies. Third, larger coverage does not lead to either better or worse targeting: there is no general tendency across the programs for marginal incidence to be above, or below, average incidence. Fourth, the targeting design of many of the programs was not followed strictly in implementation in all of the programs. Community and individual characteristics that were de jure irrelevant played a role in targeting in practice. In the rice program,community influence led to the program going to many more than the eligible individuals. In other programs, individual characteristics appear to have influenced targeting.

Suggested Citation

  • Pritchett, Lant & Sumarto, Sudarno & Suryahadi, Asep, 2001. "Targeted Programs in an Economic Crisis: Empirical Findings from Indonesia’s Experience," MPRA Paper 58727, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:58727
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    Cited by:

    1. Nicola Jones & Hannah Marsden, 2010. "Assessing the Impacts of and Response to the 1997-98 Asian Financial Crisis through a Child Rights Lens," Working papers 1002, UNICEF,Division of Policy and Strategy.
    2. Martin Ravallion, 2003. "Targeted transfers in poor countries : revisiting the trade-offs and policy options," Social Protection Discussion Papers and Notes 27869, The World Bank.
    3. Essama-Nssah, B., 2004. "A unified framework for pro-poor growth analysis," Policy Research Working Paper Series 3397, The World Bank.
    4. Ruchira Bhattacharya, 2015. "Estimating Poverty Including Social Expenditure: Adequacy and Implications of New Official Methods in the Context of Urban India," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 4(3), pages 394-432, December.
    5. Pritchett, Lant, 2005. "The political economy of targeted safety nets," Social Protection Discussion Papers and Notes 31498, The World Bank.
    6. Giles, John & Satriawan, Elan, 2015. "Protecting child nutritional status in the aftermath of a financial crisis: Evidence from Indonesia," Journal of Development Economics, Elsevier, vol. 114(C), pages 97-106.
    7. Stephen Devereux & Edoardo Masset & Rachel Sabates-Wheeler & Michael Samson & Althea-Maria Rivas & Dolf te Lintelo, 2017. "The targeting effectiveness of social transfers," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 9(2), pages 162-211, April.
    8. Sumarto, Sudarno & Bazzi, Samuel, 2011. "Social Protection in Indonesia:Past Experiences and Lessons for the Future," MPRA Paper 57893, University Library of Munich, Germany.
    9. Alain de JANVRY & Elisabeth SADOULET & Renos VAKIS, 2008. "Protecting Vulnerable Children from Uninsured Risks: Adapting Conditional Cash Transfer Programs to Provide Broader Safety Nets," Working Papers P04, FERDI.
    10. Mani, Subha & Mitra, Sophie & Sambamoorthi, Usha, 2018. "Dynamics in health and employment: Evidence from Indonesia," World Development, Elsevier, vol. 104(C), pages 297-309.
    11. Landiyanto, Erlangga Agustino, 2009. "The Impact of Health Card Program on Access to Reproductive Health Services: An Indonesian Experience," MPRA Paper 38856, University Library of Munich, Germany.
    12. Maliki, 2008. "Health Card And Health Care Facilities Demand Among The Indonesian Elderly," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(01), pages 103-119.
    13. World Bank, 2010. "Preparing for the Next Crisis : Establishing a Vulnerability and Shock Monitoring and Response System in Indonesia," World Bank Other Operational Studies 12640, The World Bank.
    14. Somanathan, Aparnaa, 2008. "The impact of price subsidies on child health care use : evaluation of the Indonesian healthcard," Policy Research Working Paper Series 4622, The World Bank.
    15. Leszek Balcerowicz & Andrzej Rzonca, 2015. "Puzzles of Economic Growth," World Bank Publications, The World Bank, number 20601.
    16. Sumarto, Sudarno & Suryahadi, Asep & Pritchett, Lant, 2003. "Safety Nets or Safety Ropes? Dynamic Benefit Incidence of Two Crisis Programs in Indonesia," World Development, Elsevier, vol. 31(7), pages 1257-1277, July.
    17. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597.
    18. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications, The World Bank, number 6582.

    More about this item

    Keywords

    Targeting; Benefic Incidence; Safety Net; Asian Crisis; Indonesia.;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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