Multidimensional poverty in Indonesia: How inclusive has economic growth been?

Abstract

In this paper, we consider different approaches to assessing inclusive growth in Indonesia since 1994. We discuss the growth incidence curve, changes in the poverty headcount by the national monetary/consumption poverty line, and changes in inequality indicators. We then develop a measure of inclusive growth based on multidimensional poverty that expands the lens to include not only education, health and household assets, but also employment. We find that the reduction of poverty measured by the national poverty line is matched by the impressive reduction in education and health poverty, and expansion of household assets. However, some basic problems remain in terms of school completion and vaccination coverage, and progress on employment-related poverty in our assessment of inclusive growth has been minimal in the last decade. We argue that the use of multidimensional poverty to assess the inclusivity of growth draws attention to the successes of administrations in providing public goods, and the enormous remaining challenge of providing sufficient employment opportunities.