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Revisiting Growth and Poverty Reduction in Indonesia: What Do Subnational Data Show?

Author

Listed:
  • Balisacan, Arsenio M.

    (University of the Philippines)

  • Pernia, Ernesto M.

    (Asian Development Bank)

  • Asra, Abuzar

    (Asian Development Bank)

Abstract

Indonesia has an impressive record of economic growth and poverty reduction over the past 2 decades. The growth–poverty nexus appears strong at the aggregate level. Newly constructed panel data on the country's 285 districts (kotamadyas/kabupatens), however, reveal huge differences in poverty changes, subnational economic growth, and local attributes. Results of econometric analysis show that besides growth, other factors directly influence the welfare of the poor, apart from their impact on growth itself. Among the critical ones are infrastructure, human capital, agricultural price incentives, and access to technology. Thus, while fostering economic growth is evidently crucial, a more complete poverty reduction strategy should take into account these relevant factors. In the context of decentralization, subnational analysis can be an instructive approach to examining local governance in relation to growth and poverty reduction.

Suggested Citation

  • Balisacan, Arsenio M. & Pernia, Ernesto M. & Asra, Abuzar, 2002. "Revisiting Growth and Poverty Reduction in Indonesia: What Do Subnational Data Show?," ADB Economics Working Paper Series 25, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0025
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    References listed on IDEAS

    as
    1. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, vol. 91(4), pages 795-813, September.
    2. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
    3. Lanjouw, Peter & Pradhan, Menno & Saadah, Fadia & Sayed, Haneen & Sparrow, Robert, 2001. "Poverty, education, and health in Indonesia : who benefits from public spending?," Policy Research Working Paper Series 2739, The World Bank.
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    5. Deolalikar, Anil B., 2002. "Poverty, Growth, and Inequality in Thailand," ADB Economics Working Paper Series 8, Asian Development Bank.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    decentralization; economic growth; poverty reduction; subnational analysis; welfare;
    All these keywords.

    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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