IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/57823.html
   My bibliography  Save this paper

Explaining the Regional Heterogeneity of Poverty: Evidence from Decentralized Indonesia

Author

Listed:
  • Sumarto, Sudarno
  • Vothknecht, Marc
  • Wijaya, Laura

Abstract

This study presents evidence from Indonesia on how the country’s recent periods of economic growth have contributed to poverty reduction at the regional level, with a particular emphasis on the role of decentralization. Over the past decade Indonesia has made significant progress in reducing poverty, from 23% of the population in 1999 to less than 12% in 2013. However, substantial differences in regional poverty are observed. In this paper, we discuss the factors that drive the evolution of poverty in a decentralized Indonesia, and relate kabupaten (district) performance in poverty reduction to a wide range of social, economic, and political characteristics within the area. The study finds gross domestic product (GDP) percapita to be one of the major driving forces behind the decline in regional poverty. Additionally, results from a panel data analysis covering the period of 2005 to 2010 show that poverty has decreased in particular in those kabupaten with (i) a larger share of local leaders with secondary education; (ii) a higher average educational attainment; (iii) an established local office for the coordination of poverty reduction initiatives (TKPKD); (iv) a higher share of fiscal revenues; and (v) a higher share of urban population. Furthermore, there appears to be a positive link between regional inequality and poverty, suggesting that a successful poverty reduction strategy requires both economic growth and sound social policies.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:57823
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/57823/1/MPRA_paper_57823.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September.
    2. Abuzar Asra, 2000. "Poverty And Inequality In Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 5(1-2), pages 91-111.
    3. Shah, Anwar & Qibthiyyah, Riatu & Dita, Astrid, 2012. "General purpose central-provincial-local transfers (DAU) in Indonesia : from gap filling to ensuring fair access to essential public services for all," Policy Research Working Paper Series 6075, The World Bank.
    4. Adams, Richard Jr., 2004. "Economic Growth, Inequality and Poverty: Estimating the Growth Elasticity of Poverty," World Development, Elsevier, vol. 32(12), pages 1989-2014, December.
    5. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
    6. Green, Keith, 2005. "Decentralization and good governance: The case of Indonesia," MPRA Paper 18097, University Library of Munich, Germany.
    7. Sudarno Sumarto & Asep Suryahadi & Alex Arifianto, "undated". "Governance and Poverty Reduction: Evidence from Newly Decentralized Indonesia," Working Papers 381, Communications Section.
    8. Mohammad Zulfan Tadjoeddin & Widjajanti I. Suharyo & Satish Mishra, 2001. "Regional Disparity and Vertical Conflict in Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 6(3), pages 283-304.
    9. Mr. Erwin H Tiongson & Mr. Hamid R Davoodi & Mr. Sanjeev Gupta, 2000. "Corruption and the Provision of Health Care and Education Services," IMF Working Papers 2000/116, International Monetary Fund.
    10. Huther, Jeff & Shah, Anwar, 1998. "Applying a simple measure of good governance to the debate on fiscal decentralization," Policy Research Working Paper Series 1894, The World Bank.
    11. Mansoob Murshed & Zulfan Tadjoeddin, 2008. "Is Fiscal Decentralization Conflict Abating? Routine Violence and District Level Government in Java, Indonesia," Research Working Papers 7, MICROCON - A Micro Level Analysis of Violent Conflict.
    12. Fitria Fitrani & Bert Hofman & Kai Kaiser, 2005. "Unity in diversity? The creation of new local governments in a decentralising Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(1), pages 57-79.
    13. Hal Hill, 2002. "Spatial Disparities in Developing East Asia: a survey," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 16(1), pages 10-35, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Harold Alderman & Ugo Gentilini & Ruslan Yemtsov, 2018. "The 1.5 Billion People Question," World Bank Publications - Books, The World Bank Group, number 27907.
    2. Julien Hanoteau, 2023. "Do foreign MNEs alleviate multidimensional poverty in developing countries?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 719-749, December.
    3. International Food Policy Research Institute, 2015. "Global Nutrition Report: Actions and Accountability to Accelerate the World’s Progress on Nutrition," Working Papers id:7417, eSocialSciences.
    4. Hal Hill, 2020. "Indonesian Living Standards over 50 Years: A Multidimensional Analysis," Asian Economic Journal, East Asian Economic Association, vol. 34(3), pages 249-274, September.
    5. Wulung Hanandita & Gindo Tampubolon, 2016. "Multidimensional Poverty in Indonesia: Trend Over the Last Decade (2003–2013)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(2), pages 559-587, September.
    6. Timmer, Peter C. & Hastuti, Hastuti & Sumarto, Sudarno, 2016. "Evolution and Implementation of the Rastra Program in Indonesia," MPRA Paper 81018, University Library of Munich, Germany, revised 30 Sep 2017.
    7. International Food Policy Research Institute, 2014. "Global Nutrition Report 2014: Actions and accountability to accelerate the world’s progress on nutrition," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-89629-564-3.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.
    2. Pierskalla, Jan H. & Sacks, Audrey, 2017. "Unpacking the Effect of Decentralized Governance on Routine Violence: Lessons from Indonesia," World Development, Elsevier, vol. 90(C), pages 213-228.
    3. Augustin Kwasi Fosu, 2009. "Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 726-745.
    4. Marinela ISTRATE & Raluca Ioana HOREA-ȘERBAN, 2018. "The dynamics of poverty and its consequences on regional inequalities in Romania," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 9, pages 63-86, June.
    5. Kis-Katos, Krisztina & Sjahrir, Bambang Suharnoko, 2017. "The impact of fiscal and political decentralization on local public investment in Indonesia," Journal of Comparative Economics, Elsevier, vol. 45(2), pages 344-365.
    6. Kalwij, Adriaan & Verschoor, Arjan, 2007. "Not by growth alone: The role of the distribution of income in regional diversity in poverty reduction," European Economic Review, Elsevier, vol. 51(4), pages 805-829, May.
    7. Lessmann, Christian & Markwardt, Gunther, 2010. "One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats," World Development, Elsevier, vol. 38(4), pages 631-646, April.
    8. Barankay, Iwan & Lockwood, Ben, 2007. "Decentralization and the productive efficiency of government: Evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1197-1218, June.
    9. Francesco Farina, 2015. "Development theory and poverty. A review," Working Papers 46-2015, Macerata University, Department of Studies on Economic Development (DiSSE), revised Jan 2015.
    10. Oasis Kodila-Tedika & Simplice A. Asongu & Julio Mukendi Kayembe, 2016. "Middle Class in Africa: Determinants and Consequences," International Economic Journal, Taylor & Francis Journals, vol. 30(4), pages 527-549, October.
    11. Mitsuhiro Hayashi & Mitsuhiko Kataoka & Takahiro Akita, 2014. "Expenditure Inequality in Indonesia, 2008–2010: A Spatial Decomposition Analysis and the Role of Education," Asian Economic Journal, East Asian Economic Association, vol. 28(4), pages 389-411, December.
    12. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Mobile Phone Penetration, Mobile Banking and Inclusive Development in Africa," The African Finance Journal, Africagrowth Institute, vol. 18(1), pages 34-52.
    13. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Rational Asymmetric Development, Piketty and Poverty in Africa," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 13(2), pages 221-246, December.
    14. Augustin Kwasi Fosu, 2010. "Income Distribution and Growth's Ability to Reduce Poverty: Evidence from Rural and Urban African Economies," WIDER Working Paper Series wp-2010-092, World Institute for Development Economic Research (UNU-WIDER).
    15. Simplice A. Asongu & Jacinta C. Nwachukwu, 2018. "Recent finance advances in information technology for inclusive development: a systematic review," Netnomics, Springer, vol. 19(1), pages 65-93, October.
    16. Blane D. Lewis, 2005. "Indonesian Local Government Spending, Taxing and Saving: An Explanation of Pre‐ and Post‐decentralization Fiscal Outcomes," Asian Economic Journal, East Asian Economic Association, vol. 19(3), pages 291-317, September.
    17. Fosu, Augustin Kwasi, 2017. "Growth, inequality, and poverty reduction in developing countries: Recent global evidence," Research in Economics, Elsevier, vol. 71(2), pages 306-336.
    18. Vincenzo Lombardo, 2011. "Growth and Inequality Effects on Poverty Reduction in Italy," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 241-280.
    19. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "Quality of Growth Empirics: Comparative gaps, benchmarking and policy syndromes," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 861-882.
    20. Ngepah, Nicholas & Espoir, Delphin Kamanda, 2018. "Binding constraints of economic growth on poverty: A dynamic panel data analysis," MPRA Paper 92136, University Library of Munich, Germany, revised 15 Oct 2018.

    More about this item

    Keywords

    Poverty; Decentralization; Economic Growth; Indonesia;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:57823. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.