(This webinar is only available in Indonesian)

During the 1970s and 1980s, Indonesia was able to achieve high economic growth without increasing inequality. However, inequality started to increase quickly during the early to mid-1990s, but was reversed back in the end of the decade due to the Asian Financial Crisis, which hit Indonesia quite hard. The recovery from the crisis was immediately followed by a resumption in the upward trend in inequality for two decades. Afterward, inequality was again stable but at a relatively high level. Long-term analysis indicates that the increase in equality was driven by the changes in four structural factors in the economy: increasing educational attainment, shifting in economic activities from farm to nonfarm sectors, urbanization, and formalization of the economy. The increase in inequality has serious repercussions on economic growth, poverty reduction, and social conflict. Unfortunately, projection of the changes in structural factors indicates that, at least for the medium-term, they will not yet lead to a declining trend in inequality. Furthermore, micro-simulation exercise shows that even a large investment in pro-poor policy will only have a limited impact on reducing inequality. These tendencies highlight the difficulties in achieving inclusive economic growth in Indonesia in the short to medium future.
  
Speaker: Asep Suryahadi (Director, The SMERU Research Institute)