{"id":34106,"date":"2017-09-11T11:00:23","date_gmt":"2017-09-11T01:00:23","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=34106"},"modified":"2017-09-11T10:46:06","modified_gmt":"2017-09-11T00:46:06","slug":"bottling-indonesias-gini","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/bottling-indonesias-gini\/","title":{"rendered":"Bottling Indonesia\u2019s Gini"},"content":{"rendered":"
<\/figure>\n

When Indonesia declared independence from Dutch rule in 1945, the country\u2019s founder, Sukarno, called on his people to build a nation that would \u2018stand in strength<\/a>\u2019, eternally united. That mantra\u2014unity and strength\u2014helped shape the country\u2019s future, including its approach to economic development. During much of Indonesia\u2019s early history, its egalitarian distribution of wealth and assets set it apart from its neighbours.<\/p>\n

But seven decades later, the legacy of equality is fading. If Indonesia is to remain one of Asia\u2019s most robust economies<\/a>, it is essential that its current leadership recommit to narrowing the socioeconomic gap.<\/p>\n

During much of the 1970s and 1980s, Indonesia\u2019s low level of income inequality helped raise living standards and reduce poverty. In 1970, just 25 years after independence, the country managed an enviable distribution of wealth among a diverse population, with a Gini coefficient (a common measure of income inequality) of 0.35 (with zero representing maximum equality). By comparison, neighbouring Malaysia had a Gini coefficient of 0.50.<\/p>\n

Indonesia\u2019s remained roughly the same for decades. But, since the Asian financial crisis in 1997, income gaps have widened throughout the region, and in Indonesia in particular, where social welfare programs have barely stemmed the rise in inequality. This year, Indonesia\u2019s Gini coefficient is around 0.39, only slightly better than the 0.41 recorded in 2014.<\/p>\n

To economists like us, this trend is deeply worrying. Because persistent high or rising inequality can contribute to political instability and undermine social cohesion, it is critical that Indonesia address it. Paradoxically, Malaysia\u2019s experience is instructive.<\/p>\n

In Malaysia, income inequality is no longer primarily a function of ethnicity, or the rural-urban divide, as it once was<\/a>. Thanks to successful redistribution strategies<\/a> adopted during the 1970s and 1980s, average per capita income increased, and poverty rates fell dramatically. Though wealth distribution remains a major concern, Malaysia\u2019s Gini coefficient has been on a steady glide towards greater equality<\/a> since the mid-1970s; in 2014, for example, it dropped to 0.40<\/a> for the first time ever (though this figure remains higher than the average for OECD economies).<\/p>\n

Indonesia is moving in the opposite direction. Not only does it have one of the highest levels of wealth inequality<\/a> in the world; it also suffers deep regional disparities. The country\u2019s poorer eastern provinces, which have a history of ethnic violence, lag behind the rest of the country<\/a> on human development indicators, infrastructure quality, and access to education. Despite the country\u2019s overall progress, food insecurity and child malnutrition remain serious issues in the east. In other words, it is not just Indonesia\u2019s income distribution that concerns us, but how unequal access to health care, education, and social services has become.<\/p>\n

Our concern is widely shared. Last month, scholars, practitioners, and policymakers from around the world gathered at the Indonesia Development Forum<\/a> to explore solutions to the many forms of inequality that are affecting Indonesia today. The challenges are complex, and discussions focused on the need for multipronged solutions. As Columbia University\u2019s Jeffrey D. Sachs<\/a> noted<\/a>, greater investment in education, and more effective wealth redistribution strategies, are the key areas that Indonesia\u2019s government must focus on.<\/p>\n

The classroom is the foundation of sustainable development everywhere. Access to education is one of the best ways for poor or disadvantaged youth to become economically productive and climb out of poverty. Unfortunately, Indonesia\u2019s public schools, especially in the east, are struggling with teacher absenteeism<\/a>. Children who want to learn simply cannot when their instructors do not show up. Broadening access to education is not only about boosting enrolment rates; it also requires ensuring accountability and improving service quality.<\/p>\n

Still, reforming the education sector alone will not be enough to close Indonesia\u2019s wealth gap. Strategies that the government should consider include expanding social protection, creating more vocational-training programs, and overhauling the tax system. In many OECD countries, redistributive policies, like tax breaks and expansion of welfare benefits, have helped reduce inequality<\/a>. If Indonesia is to hit the targets set by the United Nations\u2019 Sustainable Development Goals for reducing inequality by 2030, it must follow these countries\u2019 example.<\/p>\n

There are many reasons to be hopeful. Bambang Brodjonegoro, Indonesia\u2019s minister of national development planning, has helped make social inequality a key agenda item, following the direction of<\/a> President Joko Widodo. This time next year, the Indonesia Development Forum will meet again to gauge progress in our efforts to tackle regional inequality.<\/p>\n

Clearly, the political will exists to restore greater equality to Indonesia\u2019s economy. If current leaders can remain as focused on their vision as the country\u2019s founders were on theirs, Indonesia will again serve as a model of unity and strength for the region.<\/p>\n","protected":false},"excerpt":{"rendered":"

When Indonesia declared independence from Dutch rule in 1945, the country\u2019s founder, Sukarno, called on his people to build a nation that would \u2018stand in strength\u2019, eternally united. That mantra\u2014unity and strength\u2014helped shape the country\u2019s …<\/p>\n","protected":false},"author":709,"featured_media":34110,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[584,1193,8,2014],"class_list":["post-34106","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-development","tag-economy","tag-indonesia","tag-inequality"],"acf":[],"yoast_head":"\nBottling Indonesia\u2019s Gini | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/bottling-indonesias-gini\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bottling Indonesia\u2019s Gini | The Strategist\" \/>\n<meta property=\"og:description\" content=\"When Indonesia declared independence from Dutch rule in 1945, the country\u2019s founder, Sukarno, called on his people to build a nation that would \u2018stand in strength\u2019, eternally united. 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