The Role of Agriculture in Poverty Reduction
Edited by Fabrizio Bresciani and Alberto Valdés
Sudarno Sumarto and Asep Suryahadi INTRODUCTION Before being hit by the recent economic crisis starting in mid-1997, Indonesia was considered as one of the most successful countries in the world in the endeavor to reduce poverty. The proportion of the population living below the ‘oﬃcial’ poverty line dropped from about 40 percent in 1976 to about 11 percent in 1996. In absolute numbers, even though the total population increased from 135 million in 1976 to 200 million in 1996, the oﬃcially poor population decreased markedly from 54 million to 22.5 million during the same period (see BPS, 2002). There are methodological questions as to whether BPS poverty rates are comparable over time as well as across urban–rural populations. Nevertheless, this clearly points out that Indonesia has experienced a rapid reduction in poverty during the pre-crisis period. This rapid reduction has generally been attributed to the pre-crisis high economic growth experienced by the country, prior to the which, Indonesia was one of the most rapidly growing economies in the world. Between 1986 and 1996, the real GDP growth was more than 7 percent per year. However, beginning in mid-1997, Indonesia was struck by economic and political crises, exacerbated by the El Niño drought. During this crisis period, the Indonesian people witnessed the value of their currency fall to as low as 15 percent of its pre-crisis value in less than one year, an economic contraction by an unprecedented magnitude of 13.7 percent in 1998, and a high...
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