This article was downloaded by: [Macquarie University] On: 21 July 2013, At: 05:30 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Bulletin of Indonesian Economic Studies Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/cbie20 Poverty and Inequality in The Soeharto Era: An Assessment Anne Booth a a School of Oriental and African Studies, London Published online: 21 Aug 2006. To cite this article: Anne Booth (2000) Poverty and Inequality in The Soeharto Era: An Assessment, Bulletin of Indonesian Economic Studies, 36:1, 73-104, DOI: 10.1080/00074910012331337793 To link to this article: http://dx.doi.org/10.1080/00074910012331337793 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings,
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This article was downloaded by: [Macquarie University]On: 21 July 2013, At: 05:30Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number:1072954 Registered office: Mortimer House, 37-41 Mortimer Street,London W1T 3JH, UK
Bulletin of IndonesianEconomic StudiesPublication details, including instructions forauthors and subscription information:http://www.tandfonline.com/loi/cbie20
Poverty and Inequalityin The Soeharto Era: AnAssessmentAnne Booth aa School of Oriental and African Studies, LondonPublished online: 21 Aug 2006.
To cite this article: Anne Booth (2000) Poverty and Inequality in The SoehartoEra: An Assessment, Bulletin of Indonesian Economic Studies, 36:1, 73-104, DOI:10.1080/00074910012331337793
To link to this article: http://dx.doi.org/10.1080/00074910012331337793
PLEASE SCROLL DOWN FOR ARTICLE
Taylor & Francis makes every effort to ensure the accuracy of allthe information (the “Content”) contained in the publications on ourplatform. However, Taylor & Francis, our agents, and our licensorsmake no representations or warranties whatsoever as to the accuracy,completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views ofthe authors, and are not the views of or endorsed by Taylor & Francis.The accuracy of the Content should not be relied upon and should beindependently verified with primary sources of information. Taylor andFrancis shall not be liable for any losses, actions, claims, proceedings,
demands, costs, expenses, damages, and other liabilities whatsoeveror howsoever caused arising directly or indirectly in connection with, inrelation to or arising out of the use of the Content.
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Bulletin of Indonesian Economic Studies Vol 36 No 1, April 2000, pp. 73–104
POVERTY AND INEQUALITY IN THESOEHARTO ERA: AN ASSESSMENT
Anne Booth*
School of Oriental and African Studies, London
This paper surveys the evidence on trends in poverty and inequality duringthe years of Soeharto’s presidency. That Indonesia saw a decline in theincidence of poverty, and improvements in other welfare indicators suchas infant mortality rates and literacy rates over these years, seemsindisputable. Comparative studies show that by the latter part of the 1980s,the headcount measure of poverty in Indonesia was below that in thePhilippines although above that in Malaysia and Thailand. But relativepoverty has declined more slowly, and indeed increased in some urbanareas between 1987 and 1996. The paper also examines evidence on thedeterminants of rural poverty in Indonesia in 1993, and suggests that ruraldevelopment programs targeted to the specific needs of poor people inpoor areas will be essential if rural poverty is to be further reduced infuture years.
Thee Kian Wie is an economic historian by training, and although muchof his own research has been contemporary in focus, he has never losthis enthusiasm for the historical study of economic development, bothin Indonesia and in other parts of the world. As Soeharto’s ‘New Order’fades into history, I trust that he will appreciate a paper which exploreshow one important aspect of the New Order’s economic record might beevaluated by future economic historians. Certainly, in the Indonesiancontext, no one individual since van den Bosch has stamped hispersonality on the economic policies of an era as has Soeharto and, rightup until the crisis hit in late 1997, it was the economic achievements thatabove all others conferred legitimacy on his regime. My view is that theseachievements were substantial, and in spite of the severe economiccontraction of 1998–99 they will endure. But they are by no means fullyunderstood, and indeed I would argue that they have often beenmisrepresented by defenders and critics alike. A full examination ofSoeharto’s economic legacy is obviously beyond the scope of a journal
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article; my more limited aim here is to review some of the evidence relatingto poverty and income distribution, and to discuss the policy implicationsof this evidence.
THE SITUATION IN THE 1960s
How poor were Indonesians in March 1966, when the New Ordereffectively began? The available evidence indicates that they were verypoor indeed. Per capita income in Indonesia was well below that of otherSoutheast Asian economies for which reliable data are available; indeedreal per capita GDP is estimated to have been only 535 internationaldollars (1985 prices) in 1966, compared with 650 dollars in India.1 Thetime series compiled by van der Eng (1992: table A-4) shows that real percapita GDP (in 1983 rupiah) was about the same in 1965–67 as in 1911–13.The household survey data collected between November 1964 andFebruary 1965 indicated that in much of Java over half the ruralpopulation fell below a very modest poverty line set in terms of the priceof cereals (20 kg per capita per month). The situation was little better inurban areas. Outside Java the incidence of poverty was on average lower,although in Bali, Northern Sulawesi and West Nusa Tenggara it was littledifferent from that in Java (Booth 1988: table 4.19). Only in some parts ofSumatra and Kalimantan was the headcount measure markedly lowerthan in Java.
The stabilisation policies carried out by Soeharto and his economicsteam from 1966 to 1969 were very successful in reducing inflation tosingle-digit levels, and in returning the economy to sustained economicgrowth. Their effect on income disparities was more contentious. Kingand Weldon (1977: 703–6) compared data on household income andexpenditures from several sources for Java over the years 1963–64 to 1970.They found evidence of growing inequalities in urban areas (especiallyJakarta) although in rural areas the trend was far less marked. In 1964–65,when inflation and economic dislocation were at their height, the Ginicoefficient of consumption expenditures in urban Java (excluding Jakarta)was only 0.3; in 1967 it had fallen slightly to 0.29. But by 1969–70 it hadincreased to 0.33. It appears that inflation and economic stagnation had amore severe impact on urban workers, especially those with fixed incomessuch as civil servants. In rural areas, the better-off farmers with a surplusof food to sell probably increased their incomes relative to both urbanworkers and the rural poor. This would explain the quite low urban–rural disparities in consumption expenditures that prevailed in the mid1960s in Indonesia, and also the surprising finding that inequalities were
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actually lower in urban than in rural areas (Sundrum 1973: tables 5 and7). These trends were reversed only slowly as inflation fell and economicgrowth accelerated.
By 1969–70, the Gini coefficient of per capita consumptionexpenditures in rural Indonesia was 0.34, indicating a moderate degreeof inequality. It was slightly lower in urban areas (table 1). Internationalcomparisons are difficult, as data for other parts of the developing worldoften refer to household income rather than expenditure.2 But there islittle reason to think that inequalities in rural Indonesia were much lowerthan those in the rest of Asia, although they were probably lower than inLatin America or Africa. In urban areas, the cost of living surveys carriedout in 1968–69 indicated that the Gini coefficient of household incomewas close to, or rather greater than, 0.4 in Jakarta, Manado and Yogyakarta,although it was lower in Bandung and Surabaya, and in most of the largetowns outside Java (table 2). Bearing in mind that the Gini coefficient ofurban household incomes in the Philippines in 1971 was 0.44, and thatthat country is widely considered to have an unequal distribution of
TABLE 1 Trends in the Gini Coefficient of Household per CapitaConsumption Expenditure
Sources: BPS, Statistical Yearbook of Indonesia, various issues; 1990–96: BPS (1997a).
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income at least by Asian standards, it would appear that urban incomedisparities in Indonesia’s larger towns and cities in the latter part of the1960s were already quite marked.
Although the growth in per capita consumption expenditure thatoccurred after 1968, combined with a slight fall in rural expenditureinequalities, would have led to some decline in poverty in both urbanand rural Indonesia between 1964–65 and 1969–70, there was stillwidespread concern about the problem of poverty, especially in ruralJava. Using the poverty lines proposed by Professor Sajogyo, Sundrumand Booth (1980: table 7) estimated that 61% of the rural population inJava was poor in 1970, and 21% destitute.3 In urban Java the percentageconsidered destitute was 26%, while outside Java it was 21% in urban
TABLE 2 Urban Inequalities in Indonesia: Gini Coefficient of Household Income
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areas and 15% in rural areas. While the Sajogyo poverty line was criticisedby some analysts, there could be little doubt that the incidence of povertywas very high in many parts of Indonesia in 1970, whatever the povertyline concept used (Esmara 1986: table 9.7). Ravallion and Datt (1996a:2,480) point out that in 1970, using a comparable poverty line, India’sheadcount measure of poverty was very close to that of Indonesia. Sothere can be little doubt that, in spite of the economic recovery thatoccurred in the latter part of the 1960s, the great majority of Indonesianswere still poor by Asian standards when the first of the Soeharto era five-year plans got under way at the end of that decade.
GROWTH AND EQUITY DURING THE 1970s
The 1970s were, of course, the years when the rapid increase in the worldprice of oil had important consequences for both economic growth andincome distribution in Indonesia. By the mid 1970s there was considerabledebate about the distributional consequences of the oil boom, especiallyin rural areas of the country. It was argued that while the oil boom hadled to rapid growth in government expenditure, the benefits of this growthwere uneven by sector and region, with urban areas benefiting to adisproportionate extent. In addition, several analysts were pointing tothe adverse consequences of the real appreciation of the rupiah (popularlyknown as the ‘Dutch disease’) for the incomes of producers of non-oilexport commodities, especially in the agricultural sector (see, for example,Paauw 1978, for an early statement of this argument). While the rice sectorwas protected via import controls and producer subsidies, it was arguedthat the oil boom was harming many millions of smallholder producersof rubber, coffee, tea, pepper and copra. Even before the full effects of theoil boom were felt, the very sharp increase in the price of rice that occurredin 1972–73 was thought to have adversely affected the poorer segmentsof the population, in whose consumption basket rice and other basic foodshad a higher weight. In short, there appeared to be plenty of evidence tosupport the view that the oil boom was making the rich (especially inurban areas) richer, while the poor might actually have become worseoff.
With the benefit of hindsight and some careful appraisals of thestatistical evidence, it now appears that the rapid inflation induced byboth the rice shock of 1972–73 and the onset of the oil boom did lead tofaster growth in the cost of the consumption basket consumed by thebottom 40% of the expenditure distribution, especially in rural areas (Asra1989: table 3). In addition, real per capita expenditure in rural Java on
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average declined between 1969–70 and 1976 (Booth 1992: table 10.2). Thusthe percentage of the population and the numbers falling below the officialpoverty line actually increased in rural areas between 1970 and 1976 forthe country as a whole (table 3).
Inequalities, too, increased between 1969–70 and 1976, in both urbanand rural areas. As Asra (1989: table 1) has demonstrated, if the 1976rural expenditure data are corrected for differential changes in prices bydecile groups, then rural expenditure inequalities increased in both Javaand the Outer Islands, rather than declining as shown in the unadjusteddata (table 1). In urban Java inequalities in expenditure also increased;Booth and Sundrum (1981: table 7.22) estimate that expenditure in thetop decile group in urban Java grew by 66% between 1970 and 1976,compared with an increase of less than 20% in the bottom decile groups.On average, real per capita expenditure increased more rapidly in Jakarta
TABLE 3 Headcount Measure of Poverty According to theCentral Bureau of Statistics Poverty Line, 1970–96
Year Percentage below Numbers in Povertythe Poverty Line (millions)
aThe 1970 estimates are derived from a poverty line based on the 1976 BPS pov-erty lines, deflated using the price indices for the bottom 40% of the expendituredistribution, as estimated by Asra (1989): table 3.
Sources: BPS (1992): table 3.1; BPS (1994): table 3.1; Department of Information(1998): table IV-1.
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than in other urban areas, and more rapidly in urban Java than in urbanareas of the Outer Islands (Booth and Sundrum 1981: table 7.20). Aconsequence of these trends was a sharp increase in urban–ruraldisparities, especially on Java and especially for non-food items.
Some of these trends were reversed in the years from 1976 to 1981.Asra’s calculations suggest that between 1976 and 1981 the rate of inflationwas broadly similar for all decile groups in the expenditure distribution,both in Java and elsewhere (Asra 1989: table 2). In rural areas there was adiscernible fall in expenditure inequality. In rural Java on average, realper capita expenditure increased rapidly, although it fell in rural areasoutside Java (Booth 1992: table 10.2). The upshot of these trends was amarked decline in the incidence of poverty in both urban and rural areas,although because of faster population growth in urban areas, the numbersunder the official poverty line fell more sharply in rural areas (table 3).By 1981 it was estimated that there were 40.6 million Indonesians underthe official poverty line, of whom 9.3 million were in urban areas.
Over the 1970s, average per capita consumption expenditure hadincreased more rapidly than the official poverty line used by BPS (theCentral Bureau of Statistics, since renamed the Central Statistics Agency).Whereas in 1970 the urban poverty line was over 86% of average percapita expenditure, by 1980 it had fallen to only 56% (table 4). The fall in
TABLE 4 BPS Poverty Line as a Percentage of Average perCapita Consumption Expenditure, 1970–96
Source: BPS, Survei Sosial Ekonomi Nasional (Susenas), various years; other sourcesas for table 3.
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rural areas relative to average per capita expenditure was less rapid butstill appreciable.4 Given these trends it is of some interest to look at trendsin relative poverty during the 1970s, where relative poverty is defined interms of the proportion of the population spending less than one half, orless than one third, of average per capita consumption expenditure.5 Inurban Java, relative poverty defined in both these ways actually increasedbetween 1970 and 1980, although in urban areas of the Outer Islands andin rural areas it fell (table 5).
Certainly the decline in the incidence of both absolute and relativepoverty in rural areas of Indonesia over the 1970s was a remarkableachievement, especially in comparison with other petroleum economieswith substantial agricultural sectors. To what extent was it due togovernment policy? It is certainly true that the oil boom did see an increase
TABLE 5 Estimates of Relative Poverty, 1970 and 1980
Proportion of Population Spending
Below 50% of Average per Below 33% of Average per Capita Consumption Expenditure Capita Consumption Expenditure
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in government expenditure, although little of this increase was explicitlytargeted to the poor. Even the regional development grants, or Inpresgrants as they came to be known, were not specifically designed toalleviate poverty, but rather to give provincial and subprovincial levelsof government more scope to carry out much needed infrastructurerehabilitation and development.6 After the mid 1970s, the employmentgenerated by the ‘Inpres kabupaten’ fell continuously (Asher and Booth1992: table 2.12). The sharp fall in poverty over the latter part of the 1970swas due in part to the successful stabilisation of food prices which,especially in Java, meant that the poor experienced a lower rate of inflationthan the rich (Asra 1989: table 3). In addition, the growth in agriculturalproduction that occurred in the 1970s and early 1980s, in considerablepart due to the successful dissemination of new production technologiesin the foodcrop sector, created new employment opportunities inproduction, processing and marketing. Indonesian agriculture remainedvery unmechanised and labour intensive compared with agriculture inmost other parts of Asia well into the 1980s, because the small averagesize of holdings made purchase of agricultural machinery uneconomicfor most farmers. In addition, the devaluations of 1978 and 1983 raisedthe price of farm machinery and discouraged its adoption (Booth 1988:181).
The oil boom also led to rapid growth of sectors producing non-tradedgoods, such as construction and trade, and this growth providedadditional employment opportunities for unskilled workers. More andmore people from densely settled rural areas migrated to urban areas ona temporary or permanent basis to seek work. The 1983 AgriculturalCensus sample survey of farm incomes indicated that, on average, farmhouseholds in some provinces in Java were receiving over half theirincome from non-farm activities, including wage labour (BPS 1987:table 9). In many provinces outside Java, reliance on farm income wasgreater, reflecting both the larger average size of holdings, and the loweravailability of off-farm employment. The Social Accounting Matrices(SAM) constructed by the BPS showed that in 1975, poor farm households(defined as those controlling less than 0.5 hectares) received almost 40%of their income from off-farm sources, and in absolute terms their off-farm income was higher than for medium or large farmers (table 6). Thiswas partly reversed in 1980, when medium farmers (those controllingbetween 0.5 and one hectare) began to earn more in absolute terms fromoff-farm activities than small farmers. But the growth in off-farm incomefor small farmers was significant over these years, and must have playeda crucial role in pushing many thousands of households controlling smallamounts of land over the poverty threshold.
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The SAM tables also indicated that, over the decade 1975–85, percapita incomes of farm labourer households (the poorest of the socio-economic groups in the 1975 SAM) grew slightly faster than the nationalaverage (table 7), while those of poor farmers (those operating less than0.5 hectares) grew more slowly, so that by 1985 farm labourer householdswere earning slightly more on average than poor farm households. Butmiddle and especially larger farmers had increased their incomes evenfaster over these years, relative both to the national average and toincomes of farm labourers. The income data collected in the 1976 LabourForce Survey (Sakernas) indicated that, in both Java and the rest of thecountry in 1976, the Gini coefficient of household income distributionwas in fact higher in rural than in urban areas, and higher for agriculturalhouseholds than for any other category of household (Sigit 1985: tables 2and 3). Clearly we cannot assume that the distribution of incomes within
TABLE 6 Sources of Income for Agricultural Households, 1975–98
Year Poora Mediuma Richa
Percentage of total household income accruing from farm operation1975 62.2 77.4 88.91980 72.2 64.4 86.41985 58.4 60.7 85.31990 52.9 60.5 53.41993 49.4 58.1 50.61998 26.2 32.8 34.8
Poverty and Inequality in the Soeharto Era: An Assessment 83
the agricultural sector was especially egalitarian at the time the greenrevolution was gathering pace in Indonesia in the mid 1970s. Neithercan we assume that agricultural household incomes became more equallydistributed as a result of the dissemination of the new agriculturaltechnologies, even if the years from 1976 to 1987 were characterised bysome decline in inequality in the distribution of per capita consumptionexpenditures in rural areas (table 1).7
One of the most striking aspects of the decline in poverty in Indonesiasince the mid 1970s, as depicted in the official statistics, is that it continuedmore or less regardless of changing macroeconomic policies. Between1976 and 1981, the years of the oil boom, the annual average decline inthe numbers below the BPS poverty line was 5.6%. After 1981, Indonesia’srevenues from oil exports began to fall, and the government adopted aseries of measures designed to increase non-oil exports, diversify thedomestic tax base, attract more foreign investment, deregulate thefinancial sector, and improve the efficiency of public sector enterprises,
TABLE 7 Agricultural Household Incomes as a Percentage of the National Average,1975–98
aSee table 6 for definitions of ‘poor’, ‘medium’ and ‘rich’.
Source: BPS (1999): table 3.13.
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measures which have been much discussed (e.g. Pangestu 1991; Azis1994). Over the years from 1981 to 1987, GDP growth was lower than inthe oil boom years, and government expenditures were cut back. But inspite of fiscal austerity and slower GDP growth, the annual percentagedecline in the numbers under the official poverty line was only slightlyslower than in the oil boom years. In addition, the incidence of relativepoverty declined, in both urban and rural areas (table 8).
The Indonesian experience of 1981–87 has attracted considerableattention as one of the few examples of a sustained program ofmacroeconomic policy reform, along the lines advocated by the WorldBank and the IMF, that has not had an adverse effect on poverty (Stewart1995: 206–8; Thorbecke et al. 1992).8 Thorbecke et al. (1992: 135–6)developed a structural adjustment model for Indonesia that simulated
TABLE 8 Estimates of Relative Poverty, 1970–96
Year Urban Rural Urban + Rural
Percentage of the population spending:
Below 50% of average per capita consumption expenditure1970 20.8 21.9 22.91980 22.6 16.7 20.51984 18.8 13.5 19.01987 18.1 10.0 17.01990 20.2 10.3 16.01993 19.8 9.5 18.51996 23.2 11.8 21.2
Below 33% of average per capita consumption expenditure1970 7.2 7.9 8.11980 6.6 4.5 5.91984 4.9 3.7 4.01987 4.4 0.8 2.91990 4.1 2.3 2.41993 4.8 1.3 3.01996 6.0 1.2 5.0
Sources: BPS (1973); BPS, Statistical Yearbook of Indonesia, various issues; BPS (1997a).
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the impact of several different retrenchment policies in the 1983–87 period.They found that the policy package actually adopted came quite close tothe most favourable simulation in terms of the impact on poverty. Theyargued that a more drastic budget retrenchment ‘would have resulted inoverkill. Economic stagnation and a worsening income distribution wouldhave been a very high price to pay for maintaining the level of publicdebt prevailing at the outset of the crisis’.
The budget cuts implemented after 1981 were most severe in the morecapital-intensive sectors such as energy, transmigration and grants topublic enterprises, which did not have much direct impact onemployment (Asher and Booth 1992: table 2.7). Government expenditureas a share of GDP (estimated in international dollars; see note 1) fell from16.1% in 1982 to 14.5% in 1984, and remained at around this level for therest of the 1980s.9 Indonesia in fact managed to maintain a reasonablyexpansionary fiscal stance between 1982 and 1988 while at the same timekeeping inflation in check in the wake of two substantial devaluations,thus engineering a substantial real devaluation over these years (Intal1992: 113). One reason was that domestic monetary growth was helddown, although not at the expense of the credit needs of the export sector.In addition, the government relied on foreign borrowing to balance thebudget, which reduced the necessity for borrowing from the domesticmonetary authorities with potentially inflationary consequences.
Well judged macroeconomic policy thus created an environment inwhich producers could take advantage of the opportunities created bythe large real devaluation to expand traded goods production. At thesame time, improved infrastructure and flexible labour markets made iteasy for people to move to take advantage of new employmentopportunities, or indeed to diversify their sources of income while stayingin rural areas. In their analysis of the Susenas for 1984 and 1987, Huppiand Ravallion (1991: 1,672–3) stressed the importance of increasing wageincomes for poor self-employed farmers in Central and East Java. Thesetwo provinces accounted for over half the total income gains made bythe rural farming poor in the country as a whole over these three years.Outside Java, where wage earning opportunities were less abundant,there was less income diversification, and ‘wage earnings were of littleimportance in poverty alleviation’ (Huppi and Ravallion 1991: 1,673).
THE RETURN TO RAPID GROWTH, 1987–96
Over the period 1981–87, Indonesia managed to achieve a substantialreal devaluation without a severe domestic recession. What Intal (1992)termed the policy of ‘aggressively adjusting the exchange rate’ as the
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terms of trade declined thus paid off. Non-oil export industries grewrapidly, in response to both the real depreciation of the rupiah and theother reforms aimed at improving incentives for exporters, including theintroduction of a duty drawback scheme. The government was also ableto push through major tax reforms and, in 1988, a substantial deregulationof the financial system (Nasution 1993; Cole and Slade 1996: 109–15). Butalthough these reforms ushered in a period of faster GDP growth after1987, which was sustained right up until 1997, the years from 1987 to1996 witnessed a slower decline in the numbers under the BPS povertyline. This was especially true in rural areas: whereas from 1976 to 1987the number of people below the official poverty line in rural areas declinedat almost 7% per annum, between 1987 and 1996 the annual rate of declineslowed to just over 3% per annum. Drawing attention to this slowdownin a speech in 1994, President Soeharto suggested that increasingly thepoor were isolated in ‘pockets of poverty’ which governmentdevelopment programs were not reaching. By the mid 1990s it was
TABLE 9 Regional Breakdown of GDP, Population and Poverty Incidence, 1996(%)
Region GDPa Population Poor PovertyPopulation Incidenceb
aGDP data are provisional.b’Poverty incidence’ refers to the percentage of the population under the BPSpoverty line in 1996.cProvinces of Aceh, Riau, East Kalimantan and Irian Jaya.dProvinces of West and East Nusa Tenggara, East Timor and Maluku.
Sources: Department of Information (1998): table IV-4; BPS (1997b).
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obvious that these pockets of poverty were located in many parts of thearchipelago and not just in Java: in 1996 the incidence of poverty washigher in Kalimantan and Eastern Indonesia than in Java and Bali (table 9).
The unadjusted household survey data show a rise in inequalities inurban per capita consumption expenditure between 1990 and 1996(table 1). The household income data collected in the urban cost of livingsurveys (not yet available for the 1990s) show more or less constantinequality in Jakarta from the late 1960s until the late 1980s, but an increasein the Gini coefficient in Bandung and Surabaya (table 2). Although theproportion of the population under the official poverty line continued tofall in both urban and rural areas, there was an increase in the incidenceof relative poverty (defined as the proportion of the population spendingless than half the monthly average) in most parts of the country. It wasespecially pronounced in Jakarta, and in urban areas of West Java(table 10). The rapid population growth of greater Jakarta, and of otherlarge cities in Java, due mainly to a huge influx of migrants, has obviously
TABLE 10 Estimates of Relative Poverty, 1987 and 1996
Proportion of Population Spending below 50% ofAverage per Capita Consumption Expenditure
1987 1996
Urban areasJakarta 13.9 22.1West Java 16.9 23.9Central Java 13.3 15.2East Java 18.3 16.4North Sumatra 12.5 13.8South Sumatra 11.0 15.7South Sulawesi 12.8 16.0Indonesia 18.1 23.2
Rural areasIndonesia 10.0 11.8
Whole country 17.0 21.2
Sources: BPS, Statistical Yearbook of Indonesia (1989, 1996); BPS (1997a).
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led to sharper disparities in consumption expenditure and livingstandards.
In their study of trends in household expenditure inequalities inIndonesia between 1987 and 1993, Akita, Lukman and Yamada (1999:table III) demonstrate that both Theil and Gini indices increased in urbanareas over these years, although most of the increase occurred between1987 and 1990. There was a slight decline in rural inequalities. Theseauthors decomposed the Theil indices by region and by educationalachievement. They found, perhaps surprisingly, that interprovincialinequalities are not a major factor in overall national inequalities,confirming earlier results which showed that interprovincial disparitiesin household expenditures are far smaller than interprovincial disparitiesin GDP (Akita and Lukman 1995). They argued that rural–urbaninequalities accounted for a much larger share of overall inequalities andthus that policies aimed at reducing them should be given high priority.They also argued that educational attainment was a significantdeterminant of expenditure inequality, accounting for around 33% of totalinequalities by 1993. This finding was confirmed by Cameron (1999: 26),who concluded from her analysis of the household expenditure data for1984 and 1990 that ‘increased educational attainment was the largestsingle determinant of the inequality increase’ over these years. The policyimplications of these findings are examined in the next section.
Between 1993 and 1996, the Gini coefficient of per capita expenditurein urban Indonesia increased from 0.33 to 0.36; in rural Indonesia itincreased only slightly, and remained much lower than that for urbanareas (table 1). The increase in relative poverty in rural areas was alsomuch more modest; by 1996 the proportion of the rural populationspending less than half of average expenditure was about half that inurban areas (table 10). Some students of rural change in Indonesia findthe evidence of quite low expenditure inequalities hard to accept. It mustbe stressed again that these data refer to expenditure only, not to incomeor wealth, and attention has already been drawn to the evidence thatincome inequalities in rural areas of Indonesia in the mid 1970s weremuch higher than inequalities in per capita consumption expenditure(Sigit 1985).10 There is also evidence that since the mid 1980s themechanisms promoting an egalitarian distribution of income in rural areasmay have been working less effectively than in the decade 1975–85.
For example the SAM data show that, between 1985 and 1998, incomesfrom off-farm employment rose faster for richer farmers than for poorerones. By 1993, farmers owning more than one hectare of land were earningabout the same proportion of their total income from off-farm activitiesas were farmers owning less than half a hectare, but the absolute amount
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was much larger (table 6). Indeed household incomes for all types offarm households were lower relative to the national average in 1993 thanthey were in 1990, but only for farm labouring households were theymuch lower than in 1975 (table 7). To the extent that off-farm employmentwas having an equalising effect on rural incomes in the late 1970s andearly 1980s, this was apparently no longer the case by the early 1990s.The 1990s also saw a steep decline in all agricultural incomes relative tothe national average, but the decline was sharpest for agricultural labourerhouseholds (table 7). By 1998, per capita disposable incomes in farmsoperating more than one hectare of land were over three times those offarm labourer households, compared with less than twice in 1980 (BPS1999: table 3.14). But the SAM data also show that disparities widenedbetween rural and urban areas and especially between the rural poorand the urban well-to-do. In 1985 the ‘upper stratum’ of urban householdshad an average disposable income per capita of less than four times thatof agricultural labour households; by 1998 it was 9.5 times the level ofagricultural labour households.11
THE CHANGING TRADE-OFF BETWEENGROWTH AND EQUITY IN INDONESIA
The lesson of the years from 1987 to 1996 would seem to be that theelasticity of poverty decline with respect to economic growth fell inIndonesia. In other words, the rapid growth of these years wasaccompanied by increasing inequality, especially in urban areas, and thisincrease in inequality reduced the impact of the growth on povertydecline.12 Much more analysis of the available data is needed before wecan arrive at convincing explanations for this, but several hypothesessuggest themselves.
• Since 1987, the manufacturing and modern service sectors havebeen the principal engines of growth in the Indonesian economy;the agricultural sector has been relegated to a secondary role inpolicy debates, and receives a falling share of budgetary resources.In other parts of Asia, it has been argued that the sectoralcomposition of economic growth has an important effect onpoverty reduction. Ravallion and Datt (1996b: 19) argue that inIndia both primary and tertiary growth have ‘reduced povertynationally and within urban and rural areas’, whereas secondarysector growth has had little discernible impact on povertyreduction. Thus at least part of the reason why growth has been
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less pro-poor in Indonesia since 1987 could be that it has reliedless on agriculture and more on industry.
• Another reason put forward in some official documents, andespoused by former President Soeharto, is that increasingly sincethe mid 1980s, the poor in Indonesia have been located in remoteregions outside Java, and unable to benefit from Java’s rapidmanufacturing-based growth. To the extent that these regions arecharacterised by poor soils, erratic rainfall and poor market access,they have not benefited much from agricultural modernisationeither. According to this explanation, there is nothing inherentlyanti-poor about manufacturing-led growth, but if people arecaught in isolated poverty traps which are not connected to themore dynamic parts of the economy, and from which they cannotescape, then they cannot benefit from such growth.
• A third reason why growth has been less egalitarian in Indonesiasince the latter part of the 1980s concerns access to education, andespecially what may be termed ‘international quality highereducation’. People with degrees from the most prestigiousdomestic universities or from overseas, especially in disciplinessuch as medicine, accountancy and engineering, have been ableto command considerable ‘rents’ in the booming private sector,and their incomes have increased relative to those in other partsof the urban labour force. In spite of the rapid growth ineducational enrolments at all levels in Indonesia since the 1970s,access to international quality higher education, or even goodquality secondary education, was still severely limited in the late1980s and early 1990s, and these rents were not dissipated throughincreased supply. This explains the findings of several analyststhat educational disparities contributed significantly to overallexpenditure inequalities in these years.
As far as the first explanation is concerned, Ravallion and Datt (1996b:19) stress that the Indian result, that capital-intensive industrialisationbehind extremely high protectionist barriers had negligible benefits forthe poor, is hardly surprising. In other economies, such as Taiwan, wherethe early phase of industrialisation was more oriented to export markets,and based on more labour-intensive production technologies, the sectoralshift from agriculture to industry did not lead to a perceptible increase inincome inequalities. In fact they declined between 1953 and 1972 (Kuo1975). Indonesia after 1987 can be viewed as an intermediate case betweenIndia and Taiwan: although exports of labour-intensive manufacturesgrew rapidly, a substantial part of manufacturing value added was still
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produced in sectors enjoying high levels of protection and quite capital-intensive production technologies. Thus although there was a significantincrease in the manufacturing labour force over these years, and indeedover the entire period from 1971 to 1995, the rate of growth was not asfast as in Taiwan or South Korea (Manning 1998: 93–4).13
The second explanation, based on the notion of ‘pockets of poverty’,also has considerable empirical support. By 1996, 43% of the poorpopulation were outside Java and Bali; over 20% were in Kalimantan,Sulawesi and the eastern islands (East and West Nusa Tenggara, EastTimor and Maluku). There seems to be little doubt that relativelybackward agriculture, combined with small holding sizes, was oneexplanation for the high incidence of rural poverty in these regions. Theresults of an OLS (ordinary least squares) regression analysis, shown intable 11, indicate that a large part of the interprovincial variation in ruralpoverty in Indonesia in 1993 can be explained by just three variables:average holding size, value added per hectare in smallholder agriculture,and the proportion of total value added in smallholder agricultureaccruing from foodcrop agriculture. In those provinces where per hectareagricultural productivity is low, and this is not compensated by largerholding sizes, and where a higher proportion of agricultural value addedaccrues from the foodcrop sector than from treecrops, the poverty problemis likely to be worse than the national average. By contrast, in the denselysettled provinces of Java/Bali, low holding sizes are more thancompensated for by high per hectare productivity, so that agriculturalvalue added per farm household is higher and, in addition, off-farmsources of income are more plentiful. Thus rural poverty levels are lower.14
The policy implication of this is that agricultural and ruraldevelopment policies which raise per hectare productivity or holdingsizes should be given high priority in those parts of the Outer Islandswhere the incidence of poverty is high. This is not just because agriculturalgrowth in itself helps to alleviate poverty, but also because it fuels thegrowth of off-farm employment. Indeed, the Indonesian government hasin recent years given priority to agricultural development outside Java,especially in Eastern Indonesia. But the problems associated with bothextensive and intensive agricultural development outside Java remainformidable. The biophysical environment in Eastern Indonesia is muchless favourable to intensive agricultural development, and the seed-fertiliser-water technologies that worked well in Java and the wellirrigated parts of Sumatra and Sulawesi are not easily transferable to themore arid climate that prevails in many of the eastern islands, nor to thesoils of Kalimantan. In addition, the distribution of land is more skewedin many parts of the Outer Islands than in Java, and the benefits of
VA –0.949 –1.0037 –0.9239 –0.9756(–4.513) (–4.4262) (–5.1157) (–4.884)
GLF 0.2626 0.4974(0.5698) (1.0233)
FVA 0.8115 0.8522(2.139) (2.549)
R2 (adjusted) 0.579 0.5043 0.6288 0.5401
F-statistic F (6,19) F (5,20) F (3,22) F (2,23)6.742 6.087 15.119 15.68
SE of regression 0.2635 0.286 0.248 0.276
aAll equations estimated using logs of variables; t ratios given in brackets.AHS: average holding size.PLF: percentage of the rural labour force employed in agriculture.AHH: percentage of agricultural households with more than 70% of householdincome derived from on-farm activities.VA: value added per hectare in smallholder agriculture.GLF: growth of the agricultural labour force, 1986–94.FVA: percentage of total value added in smallholder agriculture fromfoodcrops.
Sources: Poverty data taken from BPS (1994); data on value added in agriculturefrom BPS (1997b); other agricultural data from BPS (1995a, 1995b). Labour forcedata from Sakernas, 1986 and 1994.
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agricultural development policies are more likely to accrue in the firstinstance to the non-poor population.15
The third hypothesis I have suggested to explain the fall in theelasticity of poverty decline with respect to GDP growth relates to accessto education. Since the late 1960s, Indonesia has witnessed an enormousexpansion of educational opportunities at all levels. This expansion hasbeen driven by greatly increased provision of facilities by both thegovernment and the private sector; in addition, parental demand foreducation has expanded, although this increase has not been uniform byregion or by social class. As in most other Asian countries, public subsidiesper student rise sharply by level of education. In the mid 1980s, thecumulative public subsidy per student in higher education was morethan four times the subsidy to students in primary education (Tan andMingat 1992: 80).16 Several analyses of household survey data have shownthat enrolments at the primary level vary little by income decile, but atthe secondary and tertiary levels the disparity is very marked (Gertlerand Rahman 1994: table 4.10; King 1997: 169; Oey-Gardiner 1997: 152–3).King’s analysis shows that government subsidies for primary educationare quite strongly pro-poor, because primary-aged children representtwice as large a fraction of the population in the poorest deciles as in therichest, but at the secondary and tertiary levels, especially the latter, thebenefits of public subsidies are skewed very heavily towards the richestdecile. But public subsidies do not cover the full cost of education evenat the primary level. Parental ‘top-up’ contributions have long beenrequired by government schools, and these fees are a higher proportionof household expenditure in poor households (Gertler and Rahman 1994:180).
In Indonesia, as in most other parts of the developing world, educationis viewed by parents as a crucial channel of social mobility, and the levelof education is clearly an important determinant of lifetime earnings. In1996, an employee with university qualifications was earning, on average,more than three times as much as an employee who had only completedprimary education (table 12). Thus, as far as an individual is concerned,the higher the level of educational attainment that he or she can reach,the higher the expected earnings stream over a lifetime. But at the nationallevel this simple relationship must be modified. The earnings of anyparticular type of worker are determined, ultimately, by supply anddemand, and if the supply of workers with, for example, post-secondaryqualifications increases relative to demand, their earnings can be expectedto fall. It is clear from table 12 that the very high dispersion of earningsby educational attainment that was found in Indonesia in the 1970s wasin fact compressed during the 1980s, as the supply of workers with at
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least primary qualifications increased. In addition, the level of educationrequired to gain entry to particular occupations has increased, while atthe same time new jobs have become available, especially in the factorysector, which demand only relatively modest educational qualifications.Given these changes in the labour market, and the fees associated withpost-primary education, which are high relative to average per capitaconsumption expenditure, it appears that, by the late 1980s, many parentsdecided there was little point in keeping children in school beyond theprimary level, especially when paid employment opportunities forteenagers were increasing. Over the Repelita V period (1989–94), therewas an absolute decline in numbers enrolled at both the lower and theupper secondary levels (Booth 1994: table 14).
Thus, by the 1990s differences in the level of educational attainmentin the labour force, combined with the still limited access to high qualitytertiary education, were an important factor contributing to expenditureinequalities. Akita, Lukman and Yamada (1999: 213–4) point out that if
TABLE 12 Monthly Employee Remuneration by Educational Level(Rp ‘000)
aAverage for no schooling and incomplete primary.bAverage for academy and university.
Source: BPS (1988, 1997c).
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there had been no disparities in mean expenditures by educationalattainment, total expenditure inequalities would have been much lower.They argue that raising general educational levels in Indonesia shouldhave a significant impact on inequalities over time, other things beingequal. But matters may not be as simple as this. Many parents haveapparently decided that the costs of keeping children in secondaryeducation (including forgone earnings) outweigh the perceived benefits,and all the evidence suggests that, beyond the primary level, participationin education is very dependent on family income. Although the mostrecent evidence indicates that the continuation rate from primary to lowersecondary education has increased in Indonesia over the 1990s (and hasnot been much affected by the crisis of 1997–98), it is still the case thatmany millions of children are not completing the nine-year cycle ofprimary and lower secondary education (Booth 1999c). An importantreason for this is the not inconsiderable fees associated with secondaryschooling in Indonesia relative to household incomes, and there is littlereason to expect that these will fall in coming years. Thus the findings ofKing and others that government subsidies at the post-primary levelsare skewed to the better off are unlikely to alter in the immediate future.
Given the evidence on the incidence of educational expenditures, itcould be argued that a better outcome for the poor would be achieved iffees were actually increased at the upper secondary and tertiary levels,and public subsidies reduced.17 The savings could then be used to achievethe goal of universal nine-year schooling. This would entail building newschools in remote areas, and providing better incentives for teachers towork in such areas. In addition, more funds could be directed toimproving existing primary and lower secondary facilities, and increasingteacher remuneration. Only when all children in the 7–15 year age groupsare in school should government spending on upper secondary andtertiary facilities be increased, preferably through the provision of means-tested assisted places.
The problem with this strategy is that many bright children frompoorer households will be deprived of access to upper secondary andtertiary education, as the fees would be prohibitive. Of course it could beargued that this is already the case, and that raising fees at these levelssimply reduces the subsidy paid to better-off households. But to the extentthat enrolments at the upper secondary and tertiary levels stagnate oreven decline, the transition to skill-based industrialisation in Indonesiawill be retarded. The experience of Thailand over the past decade offerssome cautionary lessons for Indonesia. Educational enrolments at thesecondary level stagnated in Thailand for much of the 1980s, and by theearly 1990s severe skill bottlenecks were emerging in many manufacturingindustries. Only when the government embarked on a massive program
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of expanding school facilities in the 1990s did enrolments at the secondarylevel increase. Even so, Thai industry and commerce are still faced withskill shortages at many levels which will take years to remedy.
CONCLUSIONS
That Indonesia has seen a decline in the incidence of absolute poverty,and improvements in other welfare indicators such as infant mortalityrates and literacy rates, over the Soeharto years can hardly be denied.Comparative studies show that by the latter part of the 1980s the incidenceof poverty in Indonesia was below that in the Philippines, although wellabove that in Thailand and Malaysia (Booth 1997a: 67–9; Ahuja et al. 1997:table 2.1; Mizoguchi and Yoshida 1998: table 3). But the decline in relativepoverty has been much slower, and indeed relative poverty has increasedin urban areas over the 1990s (table 8). One could argue that relativepoverty is the more politically sensitive indicator, as people in most partsof the world tend to compare their living standards to those of their fellowcitizens in a particular time and place, rather than to their own (or theirparents’) living conditions 10, 20 or 30 years ago.18 That the incidence ofrelative poverty increased so sharply in some of Indonesia’s largest citiesbetween 1987 and 1996 at a time when average incomes and consumerexpenditures were also increasing rapidly is at least a partial explanationfor the growing social, racial and religious tensions that were becomingmore obvious even before the full impact of the financial crisis hit in thelatter part of 1997.
Cross-sectional regression analysis based on the 1993 poverty datapublished by BPS, and the results of the 1993 Agricultural Census, showthat agricultural productivity per hectare and size of holding are stillsignificant determinants of variations in rural poverty by province. Thepolicy conclusion from these findings would seem to be that furtheremphasis on rural and agricultural development is essential if poverty isto be reduced in Indonesia. However, rural development programs shouldnot be crop-focused as in the past, but must be targeted to the specificneeds of poor people in poor regions. More effective rural developmentprograms will also help in limiting the extent of urban poverty.
In Indonesia, as in most other parts of the world, higher levels ofeducational attainment are associated with higher incomes, and thus withlower poverty. But government expenditures on upper secondary andtertiary education are still heavily skewed to the better off, and anyincrease in such expenditures is unlikely to benefit the poor in the shortrun. Indeed it will probably increase inequalities, given that educationalattainment is now an important determinant of expenditure inequalities.
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Government educational policy should therefore give top priority toincreasing participation rates among 7–15 year olds, especially in ruralareas. But unless more employment can be provided for young people inrural areas, migration to the large towns and cities will continue,aggravating problems of urban poverty and inequality, especially in Java.Rural development and employment programs must remain crucialcomponents of a successful anti-poverty policy until well into the nextcentury.
It is not the purpose of this paper to examine the impact of the financialcrisis on living standards in Indonesia; elsewhere I have suggested thatsome of the very alarming projections about increases in poverty levelsthat were circulated in the latter part of 1998 were too pessimistic (Booth1999a).19 The main message of this paper is that, in spite of the povertyreduction that undoubtedly occurred in Indonesia between 1976 and 1996,problems of poverty and relative deprivation were still serious in thefinal years of the Soeharto regime, even before the full effect of thefinancial crisis and the subsequent contraction of national income wereevident. The new government will thus have to give high priority to anti-poverty programs. Given that budgetary resources will be constrainedat least for the next five years, it is inevitable that much of the debate onpoverty policy in Indonesia will focus on more effective methods oftargeting. How can the poor be identified? How can the governmentassist the greatest number of poor people at the lowest cost? What formof assistance is most effective in permanently raising the incomes of thepoor above the poverty threshold? A considerable amount of researchon these issues has been carried out, both in Indonesia and in other partsof the world, in recent years, and much can be learned from this research.20
But translating the lessons of the past into effective policies will be aformidable challenge, both for economic planners and for the politicaland administrative apparatus that emerges in the post-Soeharto era.
NOTES
* This paper draws on earlier work done for the ILO–SEAPAT in Manila. I amgrateful to Brindha Gunasingham for statistical assistance, and to two refereesfor helpful comments on a previous draft of the paper.
1 The data are from the Penn World Tables (version 5.6) and are in internationaldollars, which means that they have been adjusted for differences in purchasingpower parities across countries. They are also adjusted for changes in the termsof trade. The data are available from: <http://datacentre.chass.utoronto.ca:5680/pwt/>.
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2 Sundrum (1973: table 8) found that the Gini coefficient of householdexpenditures in India in 1961/62 was rather lower than that estimated forrural Indonesia in 1964/65, but higher than that for rural Java in 1967.
3 The Sajogyo poverty line was set in terms of the price of rice; in rural areas thepoverty line was 320 kg of rice per person per year, and the destitution linewas 180 kg per person per year. In urban areas the poverty lines were 50%higher. Critics of the Sajogyo poverty lines argued that fixing the povertythreshold in terms of only one staple commodity was bound to produceanomalies, especially when the prices of other basic needs rose less or morerapidly than that of rice.
4 See Booth (1993) for a more detailed discussion of how the official povertyline is estimated and the criticisms that have been made of it. Even allowingfor differences in the cost of living, the Indonesian poverty line is very low incomparison with official poverty lines in the Philippines, Thailand andMalaysia. This means that a much higher proportion of the Indonesianpopulation would be classified as poor if the Thai or Malaysian line wereused; see Booth (1996, 1997a, 1997b) for further discussion of these points.BPS has used what is often termed the ‘food energy intake’ method ofestimating the poverty line, which differs in important ways from the costingof a bundle of basic needs. See Ravallion and Bidani (1994) for a more extensivediscussion of methodological problems in the Indonesian context.
5 Relative poverty lines, defined as half the mean or median household income,adjusted for household composition, have been widely used in Europeanstudies of poverty; see for example Atkinson (1995), especially chapters 4 and14. Atkinson (1983: chapter 10) discusses the merits of relative poverty linesin detail. Ravallion (1992: 33) argues that relative poverty lines may be morerelevant to developed countries, while absolute poverty lines may be morerelevant in poor countries. But it is also arguable that the relative concept isuseful in the context of poverty monitoring in fast-growing developingcountries. For example, the Korean Development Institute has used a relativepoverty line to examine trends in urban and rural poverty in South Koreabetween 1965 and 1980 (Leipziger, Dollar, Shorrocks and Song 1992: 7–8). Seealso Esmara (1986: chapter 9) for a useful discussion of different poverty lineconcepts and their application in Indonesia.
6 A good discussion of the origins of the kabupaten program, which was theoriginal Inpres program, is given by Patten, Dapice and Falcon (1980). Variouspapers in Devas (1989) discuss the evolution of the Inpres programs over the1980s. Ravallion (1988) argues that there was little evidence that the allocationof Inpres grants favoured poorer provinces in the mid 1980s, although thishad changed by the early 1990s (Booth 1996).
7 Income data from the Labour Force Surveys after 1978 have only beenpublished for wage and salary earners, which could indicate that BPS was notsatisfied with the accuracy of the data for other categories of employedworkers.
8 Ravallion and Huppi (1991) have also investigated the poverty decline underadjustment in the years from 1984 to 1987. They stress that average real private
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consumption expenditure increased over these years despite the cuts ingovernment expenditure, which had a more severe impact on investmentexpenditure than on consumption expenditure.
9 These data are taken from the Penn World Tables (see note 1 for internetaddress).
10 Gini coefficients estimated from expenditure data tend to be lower than thoseestimated from income data, as poorer families tend to spend more than theyearn (i.e. they dissave), while the opposite is true for richer families. See Rao(1984: appendix 14.1) for data on this point from the Philippines. Unfortunatelythe Susenas surveys do not report income data; it is in fact impossible to sayanything about trends in rural income distribution in Indonesia over theSoeharto years, as there are no national data available.
11 It also needs to be stressed that during 1998 inflation was very high (almost80% over the calendar year). As in earlier periods of high inflation, there isevidence that the effect was greater on the prices of goods and servicesconsumed by the poor. See Booth (1999a) for further details. This means thatin real terms the gap between incomes of the rural landless and the urbanmiddle classes widened even more than the nominal data in the SAM indicate.
12 For a useful statistical discussion of the impact of increasing or decreasinginequalities on poverty, see van der Hoeven (1999).
13 A considerably higher proportion of the non-agricultural labour force inIndonesia in 1992 was absorbed in the service sector than was the case inTaiwan, South Korea and Japan when these economies were at a similar levelof GDP per capita (Booth 1999b: table 9).
14 These results for rural areas hold even when the provinces of Java and Baliare excluded; more details are given in Booth and Gunasingham (1997).
15 Sundrum and Booth (1980: table 8) showed that the Gini coefficient of landdistribution in Kalimantan in 1973 was 0.62, compared with 0.48 in Java and0.51 in Sumatra. But these figures exclude the land held by large estates, bothprivate and government. When estate lands are added in, the distribution ofland is more skewed in Indonesia than in Taiwan, although a larger percentageof all land is in holdings under one hectare than in the Philippines or Thailand(Booth 1997c: table 6).
16 Tan and Mingat’s estimates indicate that the level of subsidy per primarystudent in Indonesia (expressed as a ratio of per capita GNP) was about averagefor the Asian region, but at the tertiary level it was much lower than average.Public subsidies are less skewed towards higher education in Indonesia thanin any other Asian country except Thailand and the Philippines.
17 Colclough (1996) gives a lucid review of the arguments for and against higherfees for upper levels of education in developing countries.
18 Atkinson (1983: 227) cites an SSRC (Social Science Research Council) documentfrom the United Kingdom which argues that people are poor ‘when theresources they can command fall seriously short of those commanded by theaverage family’ in the community where they live.
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19 As was the case after 1981, it appears that the brunt of the GDP contraction in1998 was taken by investment rather than consumption expenditures, whichdid not decline as rapidly as total GDP.
20 Van de Walle (1998) provides a lucid summary of the literature.
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