Revisiting Growth and Poverty Reduction in Indonesia

Abstract

By international standards, Indonesia has done remarkably well in both economic growth and poverty reduction. For two decades prior to the Asian financial crisis in the late 1990s, economic growth averaged 7 percent per annum. This was the norm for East Asia and was substantially higher than the average growth rate of 3.7 percent for all developing countries. At the same time, Indonesia’s poverty incidence fell from 28 percent in the mid-1980s to about 8 percent in the mid-1990s, compared with the drop from 29 percent to 27 percent in the poverty levels for all developing countries (excluding People’s Republic of China [PRC]). Indonesia’s record also compares well with those of the PRC and Thailand whose economies grew even faster.