Economic growth does not always lift the poor out of poverty, or may not do so as quickly as either governments or the poor would like. Drawing on the World Development Reports for 1990, 1997 and 2000, Coady, Grosh and Hoddinott (2004) note the emerging consensus that elements beyond growth are required for poverty alleviation, such as more intensive growth in the sectors in which the poor predominate, and a building of their asset base. They also recognise that such strategies need to be complemented by shorter-term assistance for the poorest households.

A range of transfers and social assistance is now targeted towards the poor in many developing countries, as a means to provide shortterm poverty alleviation. Social programs can be targeted broadly, where spending is directed not specifically at the poor but at the sectors where they are more likely to benefit, such as primary education, health care and rural development (van de Walle 1998). Programs may also target selected regions where pockets of poverty have been identified, or poor households or individuals by directly assessing their means (Coady, Grosh and Hoddinott 2004). How well these programs are targeted (and the costs involved) will have a large impact on how effectively they achieve their objective.

Particularly since the 1997–98 Asian financial crisis, Indonesia has implemented a range of social programs targeted both broadly and narrowly, using a variety of targeting methods. At its peak in 2006, spending on programs directly targeting poor households represented 5 per cent of all public expenditures and 45 per cent of social spending.

This chapter examines targeted social assistance and protection programs in Indonesia. We restrict ourselves to the more narrow targeting of poor households and individuals. We begin by briefly examining the evolution of targeted social programs. We then provide a quick overview of different approaches to targeting the poor, followed by an analysis of how effectively current programs are targeted. We outline some possibilities for future targeting in Indonesia before presenting our conclusions.

THE EVOLUTION OF TARGE TED SOCI AL PROGRAMS

A brief history of social assistance in Indonesia

Targeted poverty reduction and social assistance programs have been in place in Indonesia for a number of years. Here we briefly examine major events in their history. The first generation of social assistance programs targeted at households arose in response to the Asian financial crisis.