Poverty and Inequality Analysis
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.
The Indonesian experience of implementing social protection programs during the economic crisis of the late 1990s and also during the post-crisis period shows that targeting in programs of this kind is always difficult. As a consequence, social protection programs always suffer from the problems of undercoverage and leakage at the same time.
The economic crisis that began in mid-1997 had an overwhelming social impact on the Indonesian population, whose living standards deteriorated as the krismon increasingly affected their incomes. In examining this social impact, the present chapter focuses on changes in real household consumption expenditures, as they reflect actual changes in living standards and form a measurable proxy for income changes due to the crisis.
The global economic recession hit developing country economies less hard than initially expected but, despite positive macroeconomic indicators, there are few reasons to feel optimistic about the impacts on poverty and wellbeing. Based on original research, this article outlines three reasons to believe that the impacts are likely to have been severe for those in poverty.
