Poverty and Inequality Analysis
Many people reminisce about or associate a certain period of their life with the price of rice at that particular time, especially when the rice price skyrocketed. The wife of a factory worker recollects: "Then, my husband's salary was hardly enough to buy 25kg of rice. How could we possibly survive?"
Before the onset of the Asian financial crisis in 1997, the Indonesian economy was growing quickly; as a result, poverty fell significantly. Other welfare indicators, such as the infant mortality rate, the school enrolment rate and life expectancy at birth, were also showing improvements. The economic crisis that engulfed Indonesia in 1997–98 reversed these trends, resulting in a large increase in poverty in 1999.
Considerable media criticism has been directed recently at parliamentarians’ enthusiasm for costly overseas ‘working visits’ with little obvious benefit to the nation, and at their plans for a new parliamentary building. The criticism may not be fully justified, especially in relation to the latter, but is symptomatic of a high level of cynicism towards the parliament.
Targeting beneficiaries is one of the most crucial and difficult problems in the implementation of poverty reduction programs. Indonesia is a vast and populous country and currently reliable poverty statistics are only disaggregated down to the provincial level. It is not surprising that geographic targeting of the poor has been difficult.
This paper assesses the relationship between poverty reduction and economic growth in Indonesia before and after the Asian financial crisis. The annual rate of poverty reduction slowed significantly in the post-crisis period. However, the trend in the growth elasticity of poverty indicates that the power of each percentage point of economic growth to reduce poverty did not change much between the two periods.
