Slideshare pro poor growth

Atik Mar’atis Suhartini(Statistics Institute-Statistics of Indonesia)

Nunung Nuryartono, Ph. D.(Department of Economics, Faculty of Economics,

Bogor Agricultural University)

Lukytawati Anggraeni, Ph. D.(Department of Economics, Faculty of Economics,

Bogor Agricultural University)

3rd IRSA Institute, Padang, July, 20-21, 2011

Pro Poor Growth at Province Level in Indonesia

PRO POOR GROWTH AT PROVINCE PRO POOR GROWTH AT PROVINCE LEVEL IN INDONESIALEVEL IN INDONESIA

Discussion Discussion pointpoint

1. Introduction2. Literature Study3. Research Method4. Result and Discussion5. Conclusion and

Recommendation


PRO POOR GROWTH AT PROVINCE LEVEL IN PRO POOR GROWTH AT PROVINCE LEVEL IN INDONESIAINDONESIA

1. 1. IntroductionIntroduction


Backgrounds- Main problem in MTD 2005-2009: poverty and

inequality.- Poverty (P0) decreased (18.2%/2002 became

14.15%/2009), but the targets of MTD: 8.2% and MDGs: ± 7%. Gini index tends to increase. Grafik P0 dan Gini.ppt

- Pro poor growth: the growth strategy that drives the income increase of the poor, improve welfare and more equal income distribution (equity aspects); accordingly, these aspects strengthen the growth impact to poverty reduction (Grimm, et al., 2007; Kakwani and Pernia, 2000).

- Poverty phenomenon at regional level (province): increasing trend in North Sulawesi, Gorontalo, Papua, and West Papua; though, nationally, the trend in 2009 decreased compared to that of 2008.




Research Purposes

To analyze the dynamics of economic growth, income distribution, and poverty at province level in Indonesia.

To analyze the growth and distribution effects to poverty changes at province level in Indonesia.

To analyze pro poor growth degree at province level in Indonesia

To analyze the factors that influence pro poor growth at province level in Indonesia


PRO POOR GROWTH PRO POOR GROWTH TINGKAT PROVINSI DI TINGKAT PROVINSI DI INDONESIAINDONESIA

Theoretical Review

2. Literature 2. Literature StudyStudy

Various references explain that economic growth is necessary condition for poverty alleviation (Tambunan, 2009; Todaro and Smith, 2006; Siregar and Wahyuniarti, 2007).

Pro poor growth is a reciprocal relationship between growth, poverty and inequality . Pro poor growth charts according to Bourguignon (2004) as follows:

Poor People

3. Increasing income percapita, more equal income distribution

Picture 2. Poverty Changes due to growth effects and distribution effects


PRO POOR GROWTH PRO POOR GROWTH TINGKAT PROVINSI DI TINGKAT PROVINSI DI INDONESIAINDONESIA

2. Literature 2. Literature StudyStudy

Empirical Review1. Kakwani, Khandker, dan Son (2003) : economic

growth in Korea is more pro poor growth rather than in Thailand.

2. Nunez dan Espinosa (2005): measuring pro poor growth degree by PEGR in Colombia at 1996-2004. only growth in 2001 and 2003 are pro poor growth, while in other periodes are anti pro poor growth.

3. Siregar dan Wahyuniarti (2007): prove that economic growth affects the decrease in number of poor people in Indonesia by panel data regression.


2. Literature Study2. Literature Study Research Research FrameworkFramework

Picture 1. Research Picture 1. Research FrameworkFramework

Problems:1. Poverty rate is below the targets of MTDP 2005-2009 and MDGs. 2. Gini index tends to increase. 3. Poverty rate varies at province level

Description of poverty at province level

Poverty Equivalent Growth Rate (PEGR)

Pro Poor Growth indicators

Shapley Decomposition of Poverty

Growth effects Distribution effects

Factors that influence pro poor growth

Panel Data Regression

Pro Poor Growth analysis at province level in Indonesia

Policy implication



3. Research Method3. Research Method


Types and Source of Data

- Time period: 2005-2009 in 33 provinces.

- Data: annual consumption module of national socio-economic survey 2005-2009; and secondary data originated from Statistics of Indonesia and the Ministry of the Finance of the Republic if Indonesia used in this study.


3. Research 3. Research MethodMethodAnalysis Methods

1. Descriptive analysis is used to analyze the dynamics of economic growth, income distribution and poverty

to describe the dynamics of economic growth, income distribution, and poverty during research time period at province level.

2. Shapley Decomposition of Poverty: growth and distribution effects

-1- -2--1- = growth effect-2- = distribution effect

= poverty change= normalization form of if there is a change in mean

income from year t towards year s, for t≠s and t,s = 1,2


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3. Research 3. Research MethodMethod3. Measurements of pro poor growth degree with PEGR

PEGR is one of the methods used to measure the economic growth benefit degree for the poor.

: total elasticity to poverty : economic growth elasticity to poverty : actual economic growth

PEGR classifications: --- neutral growth

--- pro poor growth

--- Not pro poor growth

--- anti pro poor growth


ˆ)ˆ/ˆ(ˆ* PEGR

ˆ*ˆ ˆ*ˆ ˆ*ˆ0

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3. Research 3. Research MethodMethod


4. Factors that influence pro poor growth using data panel regression analysis

MISKINit = Poor people in province i year t. TANIit = Agricultural productivity in province i year t.INV_PEMit = Government investment spending in province i year t.RLSit = Mean of school in province i year t.RLSPit = Mean of school for girls in province i year t.RLSLit = mean of school for boys in province i year t.GINIit = Gini index in province i year t.PDDKit = Population in province i year t.βj = Estimated parameter, j = 0, 1, 2, 3, 4, 5.

αi = Individual effect province iµt = Time effect year tuit = Error component.

itititititittiit uKPDDLnGiniLnRLSPEMLnINVLnTANILnMISKIN 543210 _)(

itititititittiit uKPDDLnGiniLnRLSPPEMLnINVLnTANILnMISKIN 543210 _)(

itititititittiit uKPDDLnGiniLnRLSLPEMLnINVLnTANILnMISKIN 543210 _)(


4. Result and 4. Result and DiscussionDiscussion1. The Dynamics of Economic Growth, Income

Distribution and Poverty- Mean of economic growth at province level year

2005-2009 tends to decrease with increasing standard deviation. Grafik Growth.ppt

- Mean of income inequality at province level year 2005-2009 tends to increase with decreasing standard deviation. Grafik Gini.ppt

- Both mean and standard deviation of poor people and poverty rate at province level tend to decrease. Tabel Miskin.pptx

- High economic growth accompanied by equal distribution recovery are able to reduce poverty to below mean in Jambi, Bangka Belitung and Kalimantan Selatan. Bagi provinsi.ppt



4. Result and 4. Result and DiscussionDiscussion2. Poverty Decomposition and PEGR


Picture 2. PEGR Graph Picture 3. Shapley Decomposition of Poverty Graph

Anti PPG

Not PPG PPG PPG


4. Result and 4. Result and DiscussionDiscussionTable 1. Poverty Decomposition at Province Level


Shapley Decomposition of

Poverty2005-2006 2006-2007 2007-2008 2008-2009

Negative growth and distribution effects

1 province (Kepri) 5 provinces (Kepri, Sulut, Sulteng, Gorontalo, Maluku)

9 provinces (Sumbar, Riau, Sumsel, Jateng, Banten, NTT, Sulsel, Gorontalo, Malut)

17 other provinces

Negative growth effects, positive distribution effects

3 provinces (Kaltim, Maluku, Malut)

19 provinces (15 provinces have negative net effect)

15 provinces (all have negative net effect)

3 provinces (Sulut, Sultra, Pabar have negative net effect)

Positive growth effects, negative distribution effects

11 provinces (Sumbar, Jambi, Bengkulu, Lampung, Banten, Kalbar, Kalteng, Kalsel, Sulut, Sultra, Papua)

5 provinces (Jambi, DIY, NTB, Kaltim, Malut)

9 provinces (Lampung, Kepri, Bali, Kalsel, Sulut, Sultra, Maluku, Pabar, Papua)

13 provinces (all have negative net effect including Kepri and Gorontalo)

Positive growth and distribution effects

15 other provinces - -


4. Result and 4. Result and DiscussionDiscussionTable 2. PEGR at Province Level


Pro Poor Growth Classification

2005-2006 2006-2007 2007-2008 2008-2009

Pro Poor Growth (PEGR>Growth)

2 provinces (Kepri, Kaltim)

5 provinces (Kepri, NTB, Sulut, Sulteng, Maluku)

15 provinces 30 other provinces

Not Pro Poor Growth (0<PEGR<Growth)

- 15 other provinces 16 provinces 3 provinces (Sulut, Sultra, Pabar)

Anti Pro Poor Growth (PEGR<0)

28 Provinces (all provinces except for Kepri and Kaltim)

10 Provinces (Sumbar, Riau, Jambi, Jabar, Jateng, DIY, Kalbar, Kaltim, Malut, Papua)

2 provinces (Kepri, Pabar)

-


4. Result and 4. Result and DiscussionDiscussion

Factors that influence pro poor growth (poverty reduction) Tabel Persentase Rumah Tangga Miskin.pptx

Table 3. Factors that Influence Pro Poor Growth by Data Panel Regression Analysis


Variables

Equation One (RLS) Equation Two (RLSP)Equation Three

(RLSL)

Coefficient P-value Coefficient P-value CoefficientP-

value

C 9,8840 0,000 8,3170 0,000 8,4871 0,000

LnTANI -0,2652 0,000 -0,3096 0,000 -0,2637 0,000

LnINV_PEM -0,0405 0,269 -0,0503 0,205 -0,0509 0,208

LnRLS -2,2716 0,000 - - - -

LnRLSP - - -1,1129 0,020 - -

LnRLSL - - - - -1,5828 0,006

GINI 0,2326 0,224 0,2093 0,444 0,1171 0,592

LnPDDK 0,8786 0,000 0,8828 0,000 0,8991 0,000

F-Test 331,7900 0,000 182,2900 0,000 143,5700 0,000

R-Square 0,9892 0,9881 0,9886

Hausman Test7,93 0,1600 10,00 0,0753 10,66 0,0586

Breusch and Pagan LM Test212,52 0,0000 210,48 0,0000 205,78 0,0000

PRO POOR GROWTH AT PROVINCE LEVEL IN INDONESIAPRO POOR GROWTH AT PROVINCE LEVEL IN INDONESIA

4. Conclusion and 4. Conclusion and RecommendationRecommendationConclusion1. During MTD in 2005-2009, growth tends to

decrease, income inequality has increasing trend, and poverty decreases, but they are still far from MTDP target and the millennium goals. Poverty at province level varies and not all provinces experience poverty reduction.

2. At the beginning period (2005-2006), both growth and distribution raised poverty, but by the end period of 2008-2009 both reduce poverty. All provinces have net effect in reducing poverty at the end period.



4. Conclusion and 4. Conclusion and RecommendationRecommendationConclusion3. At the end period of MTDP of 2005-2009, growth

is of pro poor growth characteristic compared to the beginning period of anti pro poor growth characteristic. Almost all provinces experience the same condition, with the exception of several provinces experiencing the contrary. It is assumed that the different initial condition and characteristics between provinces, for example archipelago, also influence the variety of development result at province level.

4. Agriculture sector’s productivity and education level have an impact in reducing the number of the poor and therefore affect the pro poor growth. On the contrary, the number of population has positive influence in increasing the number of the poor.



4. Conclusion and 4. Conclusion and RecommendationRecommendation

Recommendation

1. Government, particularly regional, should not only pursue high growth but also pay attention to income distribution to reduce poverty. High growth with income distribution recovery will reduce poverty in greater amount. 2. The development program to achieve poverty alleviation should not only integrate between sectors and cross-ministries/institutions but also observe the characteristics between provinces that are different from one another; as stated in the MTDPN of 2010-2014 that begins to insert archipelago characteristic in development.




Recommendation

3. Government needs to tighten unfoldment requirement, especially in creating new province, because of the complexity of poverty issue in development. New provinces as the result of unfoldment need extra attention in handling poverty issue.

4. The government program to improve productivity in agriculture sector needs intensifying; for examples, research and development in agriculture sector through agriculture revitalization.




Recommendation

5.Compulsory study program should be enhanced not for nine years only but up to SLTA level, because empirical evidence shows the longer average school time (for both male and female), the less the number of the poor. Besides that, in the poverty alleviation program for education, the government should not only increase the APBN (National Expenditure and Revenue Budget) but also conduct a firm surveillance in the implementation and clearer procedure.

6. The government program in controlling population growth rate should be re-enforced, considering its positive impact to the number of the poor.



Thank You


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Slideshare pro poor growth