How Responsive is Poverty to Growth?
A Regional Analysis of Poverty, Inequality, and Growth in Indonesia, 1984-99
Uses six nationally representative household consumption surveys to develop successive poverty profiles for Indonesia over a fifteen-year period of sustained high growth followed by rapid contraction. Adopting a ‘cost-of-basic-needs’ approach to poverty determination (an approach particularly suited to measures of absolute poverty), the authors develop price indices and calculate poverty lines from unit value data, an often neglected source of information. The summary findings confirm that Indonesia has witnessed broad-based gains in poverty reduction over the period 1984–96 and then a dramatic reversal during the recent financial crisis. These summary findings, however, mask substantial diversity in growth, inequality, and poverty change across Indonesian regions and so subsequent analysis focuses on the links between growth, inequality, and changes in poverty at the regional level.