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In spite of the recent occurrence of global economic recession, the economy of Indonesia has been going on growing at a steady rate, making the country to be classified among the middle-class countries.
Due to Indonesia realizing constant economic growth, there has been a steady decrease in the overall poverty level in the country: the level has dropped from 17%, witnessed in the year 2004, to about 12.5% in the year 2011 (IFAD 1).
However, even if Indonesia has realized a reduction in the overall poverty level, the poor people, especially those living in the rural areas in this country, are currently worse off and the gap between the wealthy people and the poor is getting wider and wider (IFAD 1).
In this paper, I am going to support my viewpoint that; despite Indonesia realizing substantial economic growth, rural poverty in the country remains to be a big problem that needs to be addressed with urgent need. The conclusion section of the paper will present a summary of discussion.
Rural Poverty in Indonesia
Suryahadi and Hadiwidjaja point out the idea that Indonesia’s power to bring down the level of poverty became stronger after the occurrence of the Asian financial crisis (Suryahadi and Hadiwidjaja 20). However, they also offer an explanation that there is a slower rate of poverty reduction among the rural poor (Suryahadi and Hadiwidjaja 20).
They point out that the growth of Indonesia’s economy does not benefit individuals who need to be greatly attended to (Suryahadi and Hadiwidjaja 20). As on one hand a larger number of people living in poverty are found in the rural areas, on the other hand, there exists “a division in which the pace of poverty reduction slows down in rural areas and speeds up in urban areas after the crisis” (Suryahadi and Hadiwidjaja 20).
Moreover, these researchers observe that, the contribution made by the “urban services sector growth”, which is found to be very much effectual in poverty reduction, reduced for the rural regions after the occurrence of the Asian financial crisis (Suryahadi and Hadiwidjaja 20).
Following this, the impact of the “urban services sector” is not currently felt in the rural areas in the same way it used to be before the occurrence of the Asian financial crisis. As a result, it is not a big surprise that the overall rate of reduction of poverty level in Indonesia decreases (Suryahadi and Hadiwidjaja 20).
Approximately fifty percent of the Indonesian population lives only slightly above the poverty line (IFAD 1). This population that is near to poverty is prone to such unfavorable conditions as increases in the food prices, poor health, natural calamities among other factors, which can easily take them back to poverty (Hasan, Rana and Quibria 261).
In spite of the country taking appropriate measures, in the recent times, to bring improvements in the health as well as education sectors, the quality of health care and public services cannot measure up to the same standards as those of other middle-income nations but remains behind (Loayza and Raddatz 141).
It is also reported that high levels of undernourishment among the young kids, higher levels of deaths among mothers, lack of clean drinking water and poor quality of education for children, are found to be the most common problems affecting the poor people living in rural areas in Indonesia (IFAD 1).
An example of a fluctuation in food prices causing an increase in the poverty levels among the near-poor people can be given of a situation that occurred during the years 2005 and 2006. During that time, the Indonesian government banned imports and this led to an increase in domestic rice price (Suryahadi, Hadiwidjaja and Sumarto 7).
This was considered by a number of researchers as being among the main causes of the increase in the poverty levels (McCulloch 45; Warr 14; World Bank 1). It is pointed out that, even if there was introducing of “the UCT and an expansion of Raskin benefits around the same time, near poor households were unable to cope with the rising price of their single most important consumption good” (Suryahadi, Hadiwidjaja and Sumarto 7).
About 70% of the total number of the people in Indonesia lives in the rural areas and their major source of income is farming (IFAD 1). Research shows that poverty in these rural areas is on the increase and it has been reported that about 16.5% of the people in the rural areas live in poverty as compared to about 9.9% of those who live in urban areas (IFAD 1).
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Wetterberg, Sumarto and Pritchett point out that in Indonesia, the difference in the rates of poverty in the urban and rural areas always stands at above 6%, apart from the case of the year 1998, in the course of the Asian financial crisis which adversely affected the people living in the urban centers more than those living in the rural areas (Wetterberg, Sumarto and Pritchett 145).
A very large number of small-scale farmers are not able to capitalize on the available opportunities that economic growth offers (IFAD 1). The farmers are mostly not in a position to have access to the financial and agricultural extension services and they also do not have good and reliable markets for their farm products (IFAD 1).
Moreover, production of food by the rural population greatly puts focus on satisfying the subsistence needs (de Janvry and Sadoulet 13).
Even if this country engages in the production of the crops that have a high market value such coffee, cloves and cocoa among others, the government has not invested much in the processing, marketing and management systems which are required in the expansion of production and “take full advantage of this demand” (de Janvry and Sadoulet 13).
Poverty in Indonesia is more prevalent in the isolated eastern islands than other areas and in this region, about 95% of the people in the rural areas live in poverty (IFAD 1). In most parts of this region, people engage in subsistence farming.
The native people that have always been marginalized and have not been able to benefit from the development programs put in place by the government are in these areas. The areas in the coastal region have been environmentally degraded and the villages can only be accessed with much difficulty.
People living in these areas find that the only way they can overcome the problem of poverty is to migrate to the urban areas (IFAD 1). Some research findings have shown that migration to urban areas from the rural areas plays a big role in poverty reduction.
For instance, Abuzar Asra, following his research on poverty levels among the people who live in urban areas and rural areas, found out that in the period between 1987 and 1996, there was significant decline in poverty levels as a result of rural to urban migration in Indonesia (Asra 1).
Moreover, the women, especially those living in rural areas in Indonesia, are very susceptible to poverty. They have limited access to quality education, receive less pay as compared to men and they are often discriminated against in their communities as well as their households and may be excluded in decision making (Miranti 80).
The argument in this paper has been that: despite Indonesia realizing substantial economic growth, rural poverty in the country remains to be a big problem that needs to be addressed with urgent need. It has been found out that the country became even stronger in working towards bringing down the level of poverty after the recent Asian financial crisis.
However, poverty reduction has been found to be slower in the rural population than in the urban one. Over 70% of Indonesians live in rural areas and basically depend on agriculture for their livelihood.
But there is no adequate government support for agricultural production and marketing and the people who live in the rural areas mainly focus on subsistence farming.
In addition, women and people living in remote areas have been marginalized and discriminated against and they do not have sufficient access to the government services.
Moreover, the people in rural areas in Indonesia are also vulnerable to some unfavorable conditions such as changing food prices and poor health conditions among others. Such conditions may not make it possible for these people to evade poverty completely.
It is important that the Indonesian government take necessary measures to ensure all its people receive equal benefits from the economic growth that is being realized by the country.
Asra, Abuzar. Urban-rural differences in costs of living and their impact on poverty measures. n.d. Web.
de Janvry, Alain and Sadoulet Elisabeth. “Agricultural Growth and Poverty Reduction: Additional Evidence.” World Bank Research Observer 9.25 (2009): 1-20. Print.
Hasan, Rana and Quibria George. “Industry Matters for Poverty: A Critique of Agricultural Fundamentalism.” Kyklos, 57.2 (2004): 253-64. Print.
IFAD. Rural poverty in Indonesia, 2012. Web.
Loayza, Norman and Raddatz Claudio. “The Composition of Growth Matters for Poverty Alleviation.” Journal of Development Economics 93.1 (2010): 137-151. Print.
McCulloch, Neil. “Rice prices and poverty in Indonesia.” Bulletin of Indonesian Economic Studies 44.1(2008): 45-63. Print.
Miranti, Riyana. “Poverty in Indonesia 1984-2002: The Impact of Growth and Changes in Inequality.” Bulletin of Indonesian Economic Studies 46.1 (2010): 79-97. Print.
Suryahadi, Asep and Hadiwidjaja Gracia 2011, The role of agriculture in poverty a Poverty, food prices and economic growth in Southeast Asian perspective. Singapore: Institute of Southeast Asian Studies, 2011. Print.
Wetterberg, Anna, Sumarto Sudarno and Pritchett Lant. “A national snapshot of the social impact of Indonesia’s.” Bulletin of Indonesian Economic Studies 35.3(1999): 145-152. Print.
World Bank. Managing through a global downturn: East Asia Update. Washington DC: World Bank East Asia and Pacific Region, 2006. Print.