Spatial Dimensions of Economic Growth, Redistribution, and Poverty Reduction During the Yudhoyono Period in Indonesia

This research explores the spatial dimensions of economic growth, redistribution, and poverty reduction in Indonesia during the Susilo Bambang Yudhoyono period (i.e., from 2004 to 2014) using the poverty decomposition method, the growth incidence curve, and several pro-poor growth indices. I gathered my data from the annual National Socio-economic Surveys conducted in Indonesia between 2004 and 2014. Analyzing this data, my thesis presents three key economic insights about the Susilo Bambang Yudhoyono period:1) poverty incidence significantly declined between 2004 and 2014, 2) the economic growth that occurred during this period was generally not pro-poor, made evident by an upward sloping growth incidence curve, and 3) regional differences exist in the shape of the growth incidence curve; the pro-poorness of economic growth therefore varies between provinces. Using the classification system proposed by Kakwani and Pernia (2000), I classify provinces into the following five groups with respect to their pro-poor growth index (PPGI). Our empirical results support the pro-poor growth in a nation. However, some provinces such as North Maluku, Gorontalo and Bengkulu experienced non-pro-poor growth and weakly pro-poor. To promote the pro-poor growth in all provinces, the governmental supports in infrastructure and human capital development are essential for the above lagged provinces.

However, economic growth is usually correlated with change in expenditure inequality namely redistribution. When economic growth is followed by an increase in inequality, poverty reduction will decrease.
Furthermore, redistribution commonly looks harmless in its effect on growth; just in extreme cases is there some evidence that it may have direct negative impacts on growth. Thus, the effects of direct and indirect redistribution -including the effects of growth from lower inequalitypro-growth averages. Redistribution that takes from the rich and provides for the poor is probably going to diminish the work supply of both the rich (who are exhausted more) and poor people (to the extent that they get implies tried advantages that lessen motivators to work). Whatever impacts this has on market wages, they areprobably going to be generally balancing to the extent that they influence the two gatherings a similar way (IMF, 2014).
De Silva and Sumarto (2014) investigated the correlation between economic growth, redistribution, and poverty reduction in Indonesia between 2002 and 2012. These researchers used several pro-poor growth concepts and indices to determine whether growth in this period benefited the poor. Furthermore, Timmer (2014)  increasing demand for those goods and services that are produced by the poor.
These researchers studied whether economic growth was pro-poor or not, while also considering the fact that poverty is influenced not only by economic growth, but also by changes in income inequality. the method developed by Kakwani (1997).
Using this poverty function, the change in

Economic Growth
As discussed in the previous chapter, the change in poverty can be decomposed into growth and redistribution components. It is thus imperative to investigate economic growth and redistribution (i.e., changes in inequality) in the study period. This section will present economic growth by region and province, where economic growth is measured by the growth of mean per capita expenditure.   Tables 3 and 4  where n is total number of households, is the mean per capita expenditure and is per capita expenditure of household j in province i.

Spatial Dimensions of Economic Growth, Redistribution, and Poverty Reduction During the Yudhoyono Period in Indonesia
Email: witri.maji@gmail.com inequality, their economic growth was not strictly pro-poor. Nonetheless, they achieved the reduction of the incidence of poverty, since rising inequality did not wholly offset the poverty-reducing effect of economic growth. Therefore, this section investigates relative pro-poorness of economic growth. In the period from 2004 to 2014, Indonesia grew at 5.5% in terms of mean per capita expenditure (see Table 2) and achieved a substantial reduction in the incidence of poverty (see Table 1). However, it saw a rise in expenditure inequality; thus, the   As shown in Table 5, West Sumatera and Bangka Belitung recorded a very large decrease in the incidence of poverty, though their growth rates were not large. This is due to relatively smallincrease in expenditure inequality. Jakarta also grew less rapidly, but its inequality rose only slightly and thus the incidence of poverty has declined by 6.2 percentage points.
There is a large variation among provinces in terms of pro-poorness of economic growth. Employing the classification described above, provinces are classified into the following five groups.
The five groups are classified in:

Policy Implications
From these findings, some policy implications can be obtained. First, economic growth is moderately pro-poor in all regions according to the criteria proposed by Kakwani and Pernia (2000).