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Revisiting growth and poverty reduction in Indonesia: what do subnational data show?

Author

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  • Arsenio Balisacan
  • Ernesto Pernia
  • Abuzar Asra

Abstract

Indonesia has an impressive record of economic growth and poverty reduction over the past two decades. The growth-poverty nexus appears strong at the aggregate level. However, newly constructed panel data on the country's 285 districts reveal huge differences in poverty change, subnational economic growth and local attributes across the country. The results of econometric analysis show that growth is not the only factor to affect the rate of poverty change; other factors also directly influence the welfare of the poor, as well as having an indirect effect through their impact on growth itself. Among the critical ones are infrastructure, human capital, agricultural price incentives and access to technology. While fostering economic growth is crucial, a more complete poverty reduction strategy should take these relevant factors into account. In the context of ecentralisation, subnational analysis can be an instructive approach to examining local governance in relation to growth and poverty reduction.

Suggested Citation

  • Arsenio Balisacan & Ernesto Pernia & Abuzar Asra, 2003. "Revisiting growth and poverty reduction in Indonesia: what do subnational data show?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(3), pages 329-351.
    • Handle: RePEc:taf:bindes:v:39:y:2003:i:3:p:329-351
    DOI: 10.1080/0007491032000142782
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    More about this item

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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