The present volume consists of papers that describe the findings of research conducted by the SMERU Research Institute, Jakarta, Indonesia. The papers share a common theme in that they deal with various aspects of poverty in Indonesia. Most were written in connection with the effects on the poor of the Indonesian economic crisis of 1997–98 and the response of the Indonesian Government to those effects. Many of the papers have appeared in journals and other publications and are reproduced here with permission from the publishers. In some cases they have been edited to avoid the repetition of similar material.
The papers in the present volume fall into two groups. Chapters 2, 3, 4, and 5 deal with trends in poverty and the measurement of poverty, while Chapters 6, 7, 8, and 9 describe the major poverty alleviation policies and programs introduced by the Indonesian Government since early 1998. Chapter 1, which is the only paper in the present volume not written by SMERU researchers, gives a brief overview of the economic situation in Indonesia before and after the crisis and describes the general context in which most of the papers were written. Absolute poverty had been quite high in Indonesia in the early and mid-1960s, prior to the political upheaval that led to a change of government in 1966. During the thirty-two years of economic growth under the New Order government (1966–98), great progress had been made in social development and the incidence of absolute poverty in both urban and rural areas had declined steadily. In mid-1997, however, Indonesia was struck by a financial, economic, and political crisis whose full impact was felt only in 1998 and the following years. As the economy contracted, the poverty rate rose once again, presenting immense challenges to the post-New Order government.
The economic crisis had a major impact on consumption expenditures. Chapter 2 uses these expenditures, which reflect the actual changes that took place in living standards and which can serve as a measurable proxy for income changes, to examine the extent of poverty in the years immediately after the crisis. In doing so, it tracks changes in the headcount measure of poverty, that is, in the number and proportion of individuals whose consumption at that time was below a defined poverty line.