Poverty and Inequality Analysis
Welcome to another edition of the SMERU Newsletter. In earlier editions we have focussed our attention on the impact of the crisis on the poorer sections of the community. Yet the financial crisis began with the collapse of the banking and corporate sector in urban centers and so it is also appropriate to consider the effects of those events on "white-collar" workers.
In this paper, we investigate the relationship between economic growth and poverty reduction by differentiating growth and poverty into their sectoral composition and urban–rural location using data from Indonesia. We find that rural services growth reduces poverty in all sectors and locations. However, urban services growth has the largest effect on poverty in most sectors.
The special theme of this issue of our newsletter is smallscale credit. How to deliver efficient and effective credit services to those individuals seeking small amounts of capital is not a new problem in Indonesia.
SMERU is at present undergoing an exciting transition. This is the last year that we will operate under the umbrella of the World Bank. Beginning in January 2001 SMERU will be operating as an independent research organization. 'The SMERU Research Institute' has already been established as a Yayasan and this will become effective next year.
In response to the economic crisis of 1997—1998, the Indonesian Government introduced a series of poverty alleviation programs that together constituted the so-called Social Safety Net (JPS). But although the negative effects of the crisis on social welfare began to decline as the economy slowly recovered and macroeconomic stability was restored, the poor and vulnerable still very much needed assistance in the post-crisis period.
