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Lasting Impacts of Indonesia’s Financial Crisis

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  • Martin Ravallion
  • Michael Lokshin
Abstract
We study the poverty impacts over time and space of Indonesia’s severe economy-wide crisis of 1998, using 10 large national surveys spanning 1993-2002. On allowing for shifts in relative prices stemming from the crisis, we find a sharp but geographically uneven increase in the poverty rate in 1998, reflecting both the unevenness in the extent of the economic contraction and the differing initial conditions at the local level. Our counterfactual analyses indicate geographically diverse recovery rates 4 years later. Proportionate impacts on the poverty rate in both 1998 and 2002 were greater in initially better-off and less unequal districts. In the aggregate, a large share-possibly half-of the poverty count in 2002 is attributed to the 1998 crisis.

Suggested Citation

  • Martin Ravallion & Michael Lokshin, 2007. "Lasting Impacts of Indonesia’s Financial Crisis," Economic Development and Cultural Change, University of Chicago Press, vol. 56(1), pages 27-56, October.
    • Handle: RePEc:ucp:ecdecc:v:56:y:2007:p:27-56
    DOI: 10.1086/520558
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    1. Arsenio Balisacan & Ernesto Pernia & Abuzar Asra, 2003. "Revisiting growth and poverty reduction in Indonesia: what do subnational data show?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(3), pages 329-351.
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    11. Arsenio M Balisacan & Ernesto M Pernia & Abuzar Asra, 2003. "Revisiting Growth and Poverty Reduction in Indonesia," Palgrave Macmillan Books, in: Ernesto M Pernia & Anil B Deolalikar (ed.), Poverty, Growth, and Institutions in Developing Asia, chapter 6, pages 191-218, Palgrave Macmillan.
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    Cited by:

    1. Adama BAH, 2013. "Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia," Working Papers 201325, CERDI.
    2. Yousef Makhlouf, 2018. "Trends in income inequality," NBS Discussion Papers in Economics 2018/01, Economics, Nottingham Business School, Nottingham Trent University.
    3. Kiendrebeogo, Youssouf & Assimaidou, Kossi & Tall, Abdoulaye, 2017. "Social protection for poverty reduction in times of crisis," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 1163-1183.
    4. Cheung, Chau-kiu & Ng, Sik Hung, 2012. "Impacts of financial crisis on social engagement in Hong Kong," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 623-632.
    5. Cruces, Guillermo & Glüzmann, Pablo & Calva, Luis Felipe López, 2012. "Economic Crises, Maternal and Infant Mortality, Low Birth Weight and Enrollment Rates: Evidence from Argentina’s Downturns," World Development, Elsevier, vol. 40(2), pages 303-314.
    6. Christophe Muller & Marc Vothknecht, 2011. "Group Violence, Ethnic Diversity, and Citizen Participation: Evidence from Indonesia," Research Working Papers 48, MICROCON - A Micro Level Analysis of Violent Conflict.
    7. Yousef Makhlouf, 2023. "Trends in Income Inequality: Evidence from Developing and Developed Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(1), pages 213-243, January.
    8. Andy Sumner & Peter Edward, 2013. "From Low Income, High Poverty to High-Income, No Poverty? An Optimistic View of the Long-Run Evolution of Poverty in Indonesia By International Poverty Lines, 1984–2030," Working Papers in Economics and Development Studies (WoPEDS) 201310, Department of Economics, Padjadjaran University, revised Jun 2013.
    9. Andy Sumner, 2013. "The Evolution Of Education And Health Poverty During Economic Development:The Case Of Indonesia, 1991–2007," Working Papers in Economics and Development Studies (WoPEDS) 201311, Department of Economics, Padjadjaran University, revised May 2013.
    10. Research Group, Development, 2008. "Lessons from World Bank Research on Financial Crises," Policy Research Working Paper Series 4779, The World Bank.
    11. Takahiro Akita & Ni Made Inna Dariwardani, 2013. "Chronic and Transient Poverty in Indonesia: A Spatial Perspective with the 2008-2010 Susenas Panel Data," Working Papers EMS_2013_19, Research Institute, International University of Japan.
    12. Ferreira, Francisco H.G. & Ravallion, Martin, 2008. "Global poverty and inequality : a review of the evidence," Policy Research Working Paper Series 4623, The World Bank.
    13. Sujarwoto, Sujarwoto & Tampubolon, Gindo, 2016. "Spatial inequality and the Internet divide in Indonesia 2010–2012," Telecommunications Policy, Elsevier, vol. 40(7), pages 602-616.

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