Poverty and Inequality Analysis
Throughout the past eighteen months there has been understandable interest - and considerable debate - about the impact of the crisis on poverty in Indonesia. Many claims and counter claims have been made in the press and elsewhere which have been the cause of some confusion.
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.
