Provincial Poverty Rates in Indonesia,

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Provincial Poverty Rates in Indonesia, 2006 2011 September 2013 This publication was produced by DAI/Nathan Group for review by the United States Agency for International Development (USAID). It is made possible by the support of the American people. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the United States government.

Provincial Poverty Rates in Indonesia, 2006 2011

Acknowledgements This paper was prepared for the Tim Nasional Percepatan Penanggulangan Kemiskinan (TNP2K) in the Indonesian Vice President s Office by the SEADI Project by the Boston Institute for Development Economies (BIDE.) The paper was written by Riyana Mirant of the University of Canberra. Dr. Miranti would like to thank the USAID Support for Economic Analysis Development in Indonesia (SEADI) project for its support. The author particularly thanks Professor Gustav Papanek, Dr. Moekti Soejachmoen and Dr. Tim Buehrer for useful advice and data assistance provided on this project.

Contents Acknowledgements Contents Abbreviations Abstract i iii vi vi 1. Introduction 1 2. Recent Trends and Patterns in Provincial Poverty 3 3. Current Development Indicators of Provinces 7 Income 10 Inequality 11 Human Capital 12 Living Conditions and Community Infrastructure 13 intergovernmental Transfer 13 Migration In and Out 14 4. Data and Methodology 17 Data 17 Empirical Methodology 17 5. Results and Discussions 20 6. Conclusion 32 References 34 Illustrations Figures Figure 1. Average Number of Poor People, 2006 2011 5 Figure 2. Regional Inequality, 2007-2011 12

Tables Table 1. Poverty Incidence and Annual Changes in Poverty Rates (%) 4 Table 2. Average Poverty Rate and Annual Changes in Poverty Rates by Regional Group, 2006 2011 6 Table 3. Summary of Development Indicators 8 Table 4. Regression Results First Stage [Model 1] 23 Table 5. Main Equation [Model 1] 24 Table 6. First Stage Regression [Model 2] 25 Table 7. Main Equation [Model 2] 27 Table 8. High Inequality Provinces, First Stage Regression (Model 3) 29 Table 9. Main Equation [Model 3] 31

V Abbreviations BIDE BPS DAK DAU GDP GEP HH MP3EI OLS RGDP SEADI SENSUS SUPAS SUSENAS TNP2K USAID Boston Institute for Development Economies Central Statistics Agency of Indonesia (Biro Pusat Statistik) Special Allocation Fund (Dana Alokasi Khusus) General Allocation Fund (Dana Alokasi Umum) Gross domestic product Growth elasticity of poverty Households Indonesia s Economic Development Economic Master Plan Ordinary Least Squares Regional gross domestic product Support for Economic Analysis Development in Indonesia Population Census Intercensal Population Survey National Socioeconomic Survey Tim Nasional Percepatan Penanggulangan Kemiskinan United States Agency for International Development

Abstract This paper examines factors that are associated with disparities in regional poverty in Indonesia during the second half of the decentralization decade, from 2006 to 2011. Some of these variables can be shown to be causal, i.e., they explain the differences in poverty incidence. The paper incorporates the role of province-specific characteristics, which cover variables such as income, types of income, human capital, living condition and access to infrastructure, intergovernmental transfers, and interprovincial migration as possible factors of variations in poverty among provinces. The results of our analysis of panel data at the provincial level show that not only growth in income, particularly in the services sector (which grew the fastest during the decentralization period) and from nonfood crops, but also growth in human capital investments, played important roles in reducing poverty during this period. Keywords: Regional Development, Regional Poverty, Economic Growth, Indonesia JEL codes: I30; O40; R10

1. Introduction This paper analyzes what factors or variables are associated with variations in poverty at the provincial level in Indonesia. For some factors it is possible to establish with considerable certainty that the factors cause variations in poverty incidence that is, in the percentage of poor people. For other factors, it is also possible to establish the reverse causality that poverty incidence may affect the factors. This paper will examine income, types of income, human capital, living condition, access to infrastructure, intergovernmental transfers, and interprovincial migration as factors that might explain variations in poverty incidence. Recent data show a heterogeneous picture of provinces across Indonesia. There are significant disparities in provincial poverty rates, with East Nusa Tenggara, Papua, and Maluku persistently among those with the highest poverty incidence, and Jakarta, the capital, with the lowest poverty incidence. What regional factors are associated with or explain the variation in provincial poverty? Decentralization has focused on district-level analysis, but disparities above the district level are relevant for policymaking and still require examination. In 2011, the government of Indonesia issued the Acceleration and Expansion of Indonesia s Economic Development Economic Master Plan (MP3EI) (BAPPENAS 2011) to boost Indonesian economic growth through the development of six regional economic corridors. Each of the economic corridors an island or group of islands has its own theme based on its comparative advantages: Sumatra Centre for Production and Processing Natural Resources and Nation s Energy Reserves Java Driver for National Industry and Service Provision Bali and Nusa Tenggara Gateway for Tourism and National Food Support Kalimantan Centre for Production and Processing of National Mining and Energy Research Sulawesi Centre for Production and Processing of National Agricultural, Plantation, Fishery, Oil and Gas, and Mining Papua and Maluku Centre for Development of Food, Fisheries, Energy, and National Mining. With this master plan, the Government refocused its strategy for development in Eastern Indonesia, the less-developed regions in Indonesia, to ensure more balanced development across the country and to lower the poverty incidence. In Indonesia, provincial poverty figures may not be consistent with socioeconomic indicators; high regional gross domestic product (GDP) may not necessarily transfer to improving the welfare of the provincial population, such as has happened in Papua. Although in general rich provinces with higher income per capita have less poverty and provinces such as East Nusa Tenggara and West Nusa Tenggara have

2 P ROVINCIAL P OVERTY R ATES IN I NDONESIA, 2006-2011 both high poverty rates and low income per capita, the data in this paper show that the correlation between poverty rates and income per capita during the 2006 2011 period was relatively low, at -0.44. This study focuses on the short time span of 2006 to 2011 to uncover what has been happening in recent years, particularly the second half of the decentralization decade. Although the study focuses on short-term analysis, many findings are relevant for policy purposes, and the same framework can be used for longer periods of analysis. This study is an extension of Miranti (2007), which focuses on a longer time span, from 1984 to 2002 (in the early decentralization period), and builds on prior work in this area, including Balisacan, Pernia, and Asra (2003); Friedman (2005); Miranti (2011); Miranti and Resosudarmo (2005). Our analysis will be based on data for 33 provinces collected mainly by Central Statistics Agency in Indonesia (Biro Pusat Statistik [BPS]), from regional accounts, the National Socioeconomic Survey of SUSENAS, Population Census (SENSUS), and Intercensal Population Survey (SUPAS). This study is organized as follows: First it examines the trends and patterns of provincial poverty, and then presents current development indicators. Next it discusses data and measurement and outlines the empirical methodology and approach. Section 5 analyzes the empirical results. Section 6 summarizes the findings, conclusions, and policies..

2. Recent Trends and Patterns in Provincial Poverty Growth was slower during the decentralization period than before the 1997/1998 financial crisis. GDP increased by only 5.7 percent during 2005 2010, a much lower rate than the 7.2 percent average growth from 1990 to 1997 (Miranti et al. 2013). How does slower economic growth affect poverty? Table 1 shows the regional disparities in poverty. It shows poverty incidence in Indonesian provinces before the economic crisis in 1996, in 2006, and in 2011. It also shows the average annual change in poverty incidence from 2006 to 2011 and how the changes rank in size among provinces. Papua (with West Papua after 2006), Maluku, and East Nusa Tenggara had the highest poverty rates higher than 30 percent in 1996, 2006, and 2011. In contrast, Jakarta, Bal and South Kalimantan had the lowest poverty rates below 10 percent. The poverty incidence from 1996 to 2006 almost doubled in Jakarta and increased greatly in Aceh and Bengkulu (figures not shown in table). Poverty rates have declined in the past five years on average Indonesia experienced an annual rate of poverty reduction of almost 6 percent. Jakarta, however, had a low annual rate of poverty reduction (only 3.6 percent) as did Yogyakarta (3.2 percent). This is in contrast with Bangka Belitung and Bal which experienced the most rapid reduction more than 8 percent reduction annually. Thus, although provincial poverty rates have been declining over the past five years, the patterns of poverty are the same as during early decentralization and before decentralization.

4 P ROVINCIAL P OVERTY R ATES IN I NDONESIA, 2006-2011 Table 1 Poverty Incidence and Annual Changes in Poverty Rates (%) Poverty Incidence Average Annual Change 2006 2011 Province ID Province 1996 2006 2011 (%) Rank (%) Rank (%) Rank (%) Rank 11 DKI Jakarta 2.4 1 4.6 1 3.8 1-3.6 32 17 Bali 7.8 2 7.1 2 4.2 2-8.1 3 22 South Kalimantan 8.5 3 8.3 3 5.3 3-7.3 8 9 Bangka Belitung 10.9 5 5.8 4-9.5 1 16 Banten 9.8 4 6.3 5-7.1 10 21 Central Kalimantan 13.5 4 11.0 6 6.6 6-8.1 5 23 East Kalimantan 9.7 6 11.4 8 6.8 7-8.1 4 10 Riau Islands 12.2 11 7.4 8-7.8 6 4 Riau 12.6 8 11.9 10 8.5 9-5.7 19 24 North Sulawesi 17.9 7 11.5 9 8.5 10-5.3 25 20 West Kalimantan 24.2 13 15.2 17 8.6 11-8.7 2 5 Jambi 14.6 5 11.4 7 8.7 12-4.8 28 3 West Sumatra 9.8 9 12.5 12 9.0 13-5.5 21 31 North Maluku 12.7 13 9.2 14-5.6 20 26 South Sulawesi 16.7 11 14.6 15 10.3 15-5.9 17 12 West Java 11.1 10 14.5 14 10.7 16-5.3 24 2 North Sumatra 13.2 12 15.0 16 11.3 17-4.9 27 Indonesia 17.6 17.8 12.5-5.9 29 West Sulawesi 20.7 19 13.9 18-6.6 11 15 East Java 22.1 16 21.1 21 14.2 19-6.5 13 6 South Sumatra 15.9 15 21.0 20 14.2 20-6.4 14 27 Southeast Sulawesi 29.2 20 23.4 25 14.6 21-7.5 7 13 Central Java 21.6 17 22.2 22 15.8 22-5.8 18 25 Central Sulawesi 22.3 21 23.6 26 15.8 23-6.6 12 14 DI Yogyakarta 18.4 14 19.2 18 16.1 24-3.2 33 8 Lampung 25.6 18 22.8 23 16.9 25-5.1 26 7 Bengkulu 16.7 19 23.0 24 17.5 26-4.8 29 28 Gorontalo 29.1 29 18.8 27-7.1 9 1 Aceh 12.7 23 28.3 28 19.6 28-6.2 15 18 West Nusa Tenggara 32.0 22 27.2 27 19.7 29-5.5 23 19 East Nusa Tenggara 38.9 24 29.3 30 21.2 30-5.5 22 30 Maluku 44.6 25 33.0 31 23.0 31-6.1 16 32 West Papua 41.3 32 31.9 32-4.6 31 33 Papua 42.3 26 41.5 33 32.0 33-4.6 30 SOURCE: SUSENAS, Statistics Indonesia, various years.

T RENDS AND P ATTERNS 5 In absolute numbers, the poor are nevertheless concentrated in Java with West Java, Central Java, and East Java each having more than 5 million poor people on average during 2006 2011 (Figure 1). The poverty rates of these provinces were about the national average of 15.2 percent. The numbers of the poor in Java reflect the large overall population of these provinces. Figure 1 Average Number of Poor People, 2006 2011 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Thousands SOURCE: SUSENAS, Statistics Indonesia, various years Table 2 shows the poverty rate and the change in it by regional grouping, either by the six MPE3EI corridors or simply by East and West Indonesia. Among corridors, Kalimantan has made impressive changes in the past five years: on average Kalimantan had the lowest headcount poverty rate and the most rapid annual decline in poverty rate. The Java corridor recorded the second-lowest headcount poverty rate, because of the low rate in Jakarta, but its decline in poverty rate was very slow. Miranti and Resosudarmo (2005) found that Western Indonesia (Sumatra, Java, Bali) had lower poverty rates than Eastern Indonesia. Table shows 2 this is still the case. The gap between West and East was about 5.5 percentage points on average. However, the Eastern part of Indonesia has experienced a more rapid decline in poverty rates 6.4 percent per year. This may indicate that the Eastern part of Indonesia has been catching up to the Western part.

6 P ROVINCIAL P OVERTY R ATES IN I NDONESIA, 2006-2011 Table 2 Average Poverty Rate and Annual Changes in Poverty Rates by Regional Group, 2006 2011 Regional Group Average Poverty Rate (%) Average Annual Change in Poverty Rate (%) MP3EI C ORRIDORS Sumatra 14.11-6.07 Java 13.10-5.25 Bali and Nusa Tenggara 18.01-6.38 Kalimantan 8.63-8.05 Sulawesi 17.19-6.50 Papua and Maluku 28.40-5.20 E AST- W EST I NDONESIA Western Indonesian 13.26-5.90 Eastern Indonesia 18.73-6.44 A VERAGE I NDONESIA Indonesia 15.16-5.93 Note: The average poverty rate and annual changes in poverty rate for each regional group are calculated as a weighted average.

3. Current Development Indicators of Provinces To understand why poverty rates vary among provinces or groups of provinces, we must understand why the disparities persist. Thus, the discussion in this section focuses on selected development indicators that some argue are associated with poverty incidence. Particularly, we investigate variables that may be associated with welfare of the population living in these provinces. Table 3 provides the summaries of these indicators. The variables include income, natural resources, human capital, living conditions such as the proportion of households with clean water or clean sanitation, and the availability of infrastructure facilities, including the distance from Jakarta. Intergovernmental transfers and migration are also incorporated. Unless specified differently, the indicators discussed cover mean values in the period 2006 2011. Various groupings of provinces have been used in Indonesia over the years. The conventional classification of provinces is into Java-Bali provinces and Outer Island provinces. The Outer Islands in turn are divided into five groups of islands: Sumatra, Nusa Tenggara, Kalimantan, Sulawes and Maluku-Papua (or Eastern and Western Indonesia, as explained earlier). This division has long been used because the Western part of Indonesia is more developed than the Eastern part. A more sophisticated regional grouping is based on structural characteristics. Hill (1989) pioneered this type of classification by taking into account geographical location, natural resource endowment, and population density. Hill s original classification, based on 1980s data, has been updated by Miranti (2007, 2011) with indicators from the early 2000s. In this section, we are not just comparing the provinces, but we are aiming to inform policy, so we use the corridor groups defined in Indonesia s master plan, MP3EI, to classify the provinces. Thus, although Bali shares a similar stage of development with Java, we classify Bali with the Nusa Tenggara provinces as popular tourist destinations.

Table 3 Summary of Development Indicators No Province Inequality!Gini!Index!!RGDP!per! capita!!!!rgdp!per! capita!non! oil!and!gas!!!!monthly! mean! consumption! per!capita!!! Income!(Million!2000!Rp)!!Manufacturing! Agricultural! RGDP!per!urban! RGDP!per!! capita!! rural!capita!!!service! RGDP!per! capita!!!!mining! RGDP! per! capita!!!!forestry! RGDP! per! capita!!! Natural!resources!NonAfood! crops! RGDP!per! capita!!!resource! rich!rgdp! per!capita!!!proportion!of! natural! resource!to! RGDP!(%)! Sumatra!!!!!!!!!!!!!!!0.314!!!!!!!!!!!!!!!!!9.71!!!!!!!!!!!!!!!!!!8.28!!!!!!!!!!!!!!!!!!!!!0.31!!!!!!!!!!!!!!!!3.29!!!!!!!!!!!!!!!!!!!!!!!!6.19!!!!!!!!!!!!!!!3.50!!!!!!!!!!1.60!!!!!!!!!!0.17!!!!!!!!!!!!!0.73!!!!!!!!!!!!!!!!!0.83!!!!!!!!!!!!!!!!!!!24.42! 1 Aceh &&&&&&&&&&&&&&&0.295& &&&&&&&&&&&&&&&&7.93& &&&&&&&&&&&&&&&&&6.27& &&&&&&&&&&&&&&&&&&&&0.19& &&&&&&&&&&&&&&&2.86& &&&&&&&&&&&&&&&&&&&&&&&3.87& &&&&&&&&&&&&&&3.52& &&&&&&&&&1.21& &&&&&&&&&0.13& &&&&&&&&&&&&2.54& &&&&&&&&&&&&&&&&1.29& &&&&&&&&&&&&&&&&&&46.56& 2 North&Sumatra &&&&&&&&&&&&&&&0.322& &&&&&&&&&&&&&&&&8.54& &&&&&&&&&&&&&&&&&8.48& &&&&&&&&&&&&&&&&&&&&0.20& &&&&&&&&&&&&&&&3.77& &&&&&&&&&&&&&&&&&&&&&&&4.60& &&&&&&&&&&&&&&3.81& &&&&&&&&&0.10& &&&&&&&&&0.11& &&&&&&&&&&&&0.33& &&&&&&&&&&&&&&&&0.18& &&&&&&&&&&&&&&&&&&&&6.46& 3 West&Sumatra &&&&&&&&&&&&&&&0.313& &&&&&&&&&&&&&&&&7.55& &&&&&&&&&&&&&&&&&7.55& &&&&&&&&&&&&&&&&&&&&0.22& &&&&&&&&&&&&&&&2.89& &&&&&&&&&&&&&&&&&&&&&&&3.28& &&&&&&&&&&&&&&4.25& &&&&&&&&&0.24& &&&&&&&&&0.11& &&&&&&&&&&&&0.47& &&&&&&&&&&&&&&&&0.27& &&&&&&&&&&&&&&&&&&10.45& 4 Riau &&&&&&&&&&&&&&&0.326& &&&&&&&&&&&&&&17.51& &&&&&&&&&&&&&&&&&8.17& &&&&&&&&&&&&&&&&&&&&0.18& &&&&&&&&&&&&&&&5.72& &&&&&&&&&&&&&&&&&&&&&&&4.30& &&&&&&&&&&&&&&3.05& &&&&&&&&&8.72& &&&&&&&&&0.97& &&&&&&&&&&&&0.34& &&&&&&&&&&&&&&&&3.34& &&&&&&&&&&&&&&&&&&58.32& 5 Jambi &&&&&&&&&&&&&&&0.298& &&&&&&&&&&&&&&&&5.32& &&&&&&&&&&&&&&&&&5.26& &&&&&&&&&&&&&&&&&&&&0.14& &&&&&&&&&&&&&&&2.51& &&&&&&&&&&&&&&&&&&&&&&&2.71& &&&&&&&&&&&&&&2.16& &&&&&&&&&0.67& &&&&&&&&&0.09& &&&&&&&&&&&&0.62& &&&&&&&&&&&&&&&&0.46& &&&&&&&&&&&&&&&&&&24.92& 6 South&Sumatra &&&&&&&&&&&&&&&0.320& &&&&&&&&&&&&&&&&8.20& &&&&&&&&&&&&&&&&&6.35& &&&&&&&&&&&&&&&&&&&&0.17& &&&&&&&&&&&&&&&2.66& &&&&&&&&&&&&&&&&&&&&&&&4.21& &&&&&&&&&&&&&&2.61& &&&&&&&&&1.94& &&&&&&&&&0.13& &&&&&&&&&&&&0.77& &&&&&&&&&&&&&&&&0.95& &&&&&&&&&&&&&&&&&&34.13& 7 Bengkulu &&&&&&&&&&&&&&&0.332& &&&&&&&&&&&&&&&&4.58& &&&&&&&&&&&&&&&&&4.58& &&&&&&&&&&&&&&&&&&&&0.19& &&&&&&&&&&&&&&&2.67& &&&&&&&&&&&&&&&&&&&&&&&0.67& &&&&&&&&&&&&&&2.26& &&&&&&&&&0.16& &&&&&&&&&0.06& &&&&&&&&&&&&0.58& &&&&&&&&&&&&&&&&0.27& &&&&&&&&&&&&&&&&&&17.87& 8 Lampung &&&&&&&&&&&&&&&0.355& &&&&&&&&&&&&&&&&4.75& &&&&&&&&&&&&&&&&&4.70& &&&&&&&&&&&&&&&&&&&&0.15& &&&&&&&&&&&&&&&2.60& &&&&&&&&&&&&&&&&&&&&&&&2.86& &&&&&&&&&&&&&&1.81& &&&&&&&&&0.10& &&&&&&&&&0.02& &&&&&&&&&&&&0.46& &&&&&&&&&&&&&&&&0.19& &&&&&&&&&&&&&&&&&&12.50& 9 Bangka&Belitung &&&&&&&&&&&&&&&0.282& &&&&&&&&&&&&&&&&8.68& &&&&&&&&&&&&&&&&&8.51& &&&&&&&&&&&&&&&&&&&&1.25& &&&&&&&&&&&&&&&4.18& &&&&&&&&&&&&&&&&&&&&&&&5.16& &&&&&&&&&&&&&&3.20& &&&&&&&&&1.43& &&&&&&&&&0.05& &&&&&&&&&&&&1.11& &&&&&&&&&&&&&&&&0.86& &&&&&&&&&&&&&&&&&&27.11& 10 Riau&Islands Java &&&&&&&&&&&&&&&0.300& &&&&&&&&&&&&&&24.06& &&&&&&&&&&&&&&&22.94& &&&&&&&&&&&&&&&&&&&&0.38& &&&&&&&&&&&&&&&3.03& &&&&&&&&&&&&&&&&&&&&&30.25& &&&&&&&&&&&&&&8.34& &&&&&&&&&1.39& &&&&&&&&&0.01& &&&&&&&&&&&&0.06& &&&&&&&&&&&&&&&&0.49& &&&&&&&&&&&&&&&&&&&&5.91&!!!!!!!!!!!!!!!0.358!!!!!!!!!!!!!!!12.15!!!!!!!!!!!!!!!!12.04!!!!!!!!!!!!!!!!!!!!!0.25!!!!!!!!!!!!!!!!2.30!!!!!!!!!!!!!!!!!!!!!!!!5.35!!!!!!!!!!!!!!!7.43!!!!!!!!!!0.10!!!!!!!!!!0.02!!!!!!!!!!!!!0.09!!!!!!!!!!!!!!!!!0.07!!!!!!!!!!!!!!!!!!!!!2.68! 11 DKI&Jakarta &&&&&&&&&&&&&&&0.372& &&&&&&&&&&&&&&38.65& &&&&&&&&&&&&&&&38.55& &&&&&&&&&&&&&&&&&&&&0.47& &&&&&&&&&&&&&&&&&&&J&&& &&&&&&&&&&&&&&&&&&&&&&&6.75& &&&&&&&&&&&&29.37& &&&&&&&&&0.11& &&&&&&&&&&&&0.01& &&&&&&&&&&&&&&&&0.06& &&&&&&&&&&&&&&&&&&&&0.28& 12 West&Java &&&&&&&&&&&&&&&0.363& &&&&&&&&&&&&&&&&7.11& &&&&&&&&&&&&&&&&&6.90& &&&&&&&&&&&&&&&&&&&&0.20& &&&&&&&&&&&&&&&2.36& &&&&&&&&&&&&&&&&&&&&&&&6.34& &&&&&&&&&&&&&&2.54& &&&&&&&&&0.17& &&&&&&&&&0.01& &&&&&&&&&&&&0.05& &&&&&&&&&&&&&&&&0.08& &&&&&&&&&&&&&&&&&&&&3.23& 13 Central&Java &&&&&&&&&&&&&&&0.330& &&&&&&&&&&&&&&&&5.38& &&&&&&&&&&&&&&&&&5.05& &&&&&&&&&&&&&&&&&&&&0.15& &&&&&&&&&&&&&&&2.00& &&&&&&&&&&&&&&&&&&&&&&&4.08& &&&&&&&&&&&&&&2.16& &&&&&&&&&0.06& &&&&&&&&&0.02& &&&&&&&&&&&&0.19& &&&&&&&&&&&&&&&&0.09& &&&&&&&&&&&&&&&&&&&&5.03& 14 DI&Yogyakarta &&&&&&&&&&&&&&&0.382& &&&&&&&&&&&&&&&&5.78& &&&&&&&&&&&&&&&&&5.78& &&&&&&&&&&&&&&&&&&&&0.23& &&&&&&&&&&&&&&&2.96& &&&&&&&&&&&&&&&&&&&&&&&1.39& &&&&&&&&&&&&&&3.33& &&&&&&&&&0.04& &&&&&&&&&0.05& &&&&&&&&&&&&0.03& &&&&&&&&&&&&&&&&0.04& &&&&&&&&&&&&&&&&&&&&2.12& 15 East&Java &&&&&&&&&&&&&&&0.338& &&&&&&&&&&&&&&&&8.50& &&&&&&&&&&&&&&&&&8.48& &&&&&&&&&&&&&&&&&&&&0.17& &&&&&&&&&&&&&&&2.63& &&&&&&&&&&&&&&&&&&&&&&&5.22& &&&&&&&&&&&&&&4.47& &&&&&&&&&0.19& &&&&&&&&&0.02& &&&&&&&&&&&&0.19& &&&&&&&&&&&&&&&&0.13& &&&&&&&&&&&&&&&&&&&&4.62& 16 Banten Bali!and!Nusa!Tenggara &&&&&&&&&&&&&&&0.363& &&&&&&&&&&&&&&&&7.47& &&&&&&&&&&&&&&&&&7.47& &&&&&&&&&&&&&&&&&&&&0.28& &&&&&&&&&&&&&&&1.55& &&&&&&&&&&&&&&&&&&&&&&&8.32& &&&&&&&&&&&&&&2.71& &&&&&&&&&0.01& &&&&&&&&&0.00& &&&&&&&&&&&&0.05& &&&&&&&&&&&&&&&&0.02& &&&&&&&&&&&&&&&&&&&&0.79&!!!!!!!!!!!!!!!0.348!!!!!!!!!!!!!!!!!4.56!!!!!!!!!!!!!!!!!!4.51!!!!!!!!!!!!!!!!!!!!!0.18!!!!!!!!!!!!!!!!3.90!!!!!!!!!!!!!!!!!!!!!!!!0.77!!!!!!!!!!!!!!!2.53!!!!!!!!!!0.35!!!!!!!!!!0.00!!!!!!!!!!!!!0.10!!!!!!!!!!!!!!!!!0.15!!!!!!!!!!!!!!!!!!!11.67! 17 Bali &&&&&&&&&&&&&&&0.340& &&&&&&&&&&&&&&&&7.13& &&&&&&&&&&&&&&&&&6.93& &&&&&&&&&&&&&&&&&&&&0.25& &&&&&&&&&&&&&&&3.63& &&&&&&&&&&&&&&&&&&&&&&&1.50& &&&&&&&&&&&&&&4.70& &&&&&&&&&0.05& &&&&&&&&&0.00& &&&&&&&&&&&&0.07& &&&&&&&&&&&&&&&&0.04& &&&&&&&&&&&&&&&&&&&&1.57& 18 West&Nusa&Tenggara &&&&&&&&&&&&&&&0.348& &&&&&&&&&&&&&&&&4.03& &&&&&&&&&&&&&&&&&4.03& &&&&&&&&&&&&&&&&&&&&0.15& &&&&&&&&&&&&&&&6.80& &&&&&&&&&&&&&&&&&&&&&&&0.54& &&&&&&&&&&&&&&1.51& &&&&&&&&&0.97& &&&&&&&&&0.00& &&&&&&&&&&&&0.11& &&&&&&&&&&&&&&&&0.36& &&&&&&&&&&&&&&&&&&27.45& 19 East&Nusa&Tenggara Kalimantan &&&&&&&&&&&&&&&0.355& &&&&&&&&&&&&&&&&2.51& &&&&&&&&&&&&&&&&&2.57& &&&&&&&&&&&&&&&&&&&&0.13& &&&&&&&&&&&&&&&1.26& &&&&&&&&&&&&&&&&&&&&&&&0.26& &&&&&&&&&&&&&&1.38& &&&&&&&&&0.04& &&&&&&&&&0.01& &&&&&&&&&&&&0.12& &&&&&&&&&&&&&&&&0.05& &&&&&&&&&&&&&&&&&&&&6.00&!!!!!!!!!!!!!!!0.334!!!!!!!!!!!!!!!13.40!!!!!!!!!!!!!!!!10.00!!!!!!!!!!!!!!!!!!!!!0.24!!!!!!!!!!!!!!!!3.82!!!!!!!!!!!!!!!!!!!!!!!!7.44!!!!!!!!!!!!!!!3.93!!!!!!!!!!4.02!!!!!!!!!!0.26!!!!!!!!!!!!!0.65!!!!!!!!!!!!!!!!!1.64!!!!!!!!!!!!!!!!!!!27.94! 20 West&Kalimantan &&&&&&&&&&&&&&&0.335& &&&&&&&&&&&&&&&&6.49& &&&&&&&&&&&&&&&&&6.49& &&&&&&&&&&&&&&&&&&&&0.21& &&&&&&&&&&&&&&&2.20& &&&&&&&&&&&&&&&&&&&&&&&4.52& &&&&&&&&&&&&&&2.92& &&&&&&&&&0.10& &&&&&&&&&0.08& &&&&&&&&&&&&0.55& &&&&&&&&&&&&&&&&0.25& &&&&&&&&&&&&&&&&&&11.80& 21 Central&Kalimantan &&&&&&&&&&&&&&&0.297& &&&&&&&&&&&&&&&&8.01& &&&&&&&&&&&&&&&&&8.00& &&&&&&&&&&&&&&&&&&&&0.21& &&&&&&&&&&&&&&&3.82& &&&&&&&&&&&&&&&&&&&&&&&2.36& &&&&&&&&&&&&&&3.40& &&&&&&&&&0.71& &&&&&&&&&0.20& &&&&&&&&&&&&1.20& &&&&&&&&&&&&&&&&0.70& &&&&&&&&&&&&&&&&&&27.40& 22 South&Kalimantan &&&&&&&&&&&&&&&0.347& &&&&&&&&&&&&&&&&8.02& &&&&&&&&&&&&&&&&&7.89& &&&&&&&&&&&&&&&&&&&&0.28& &&&&&&&&&&&&&&&3.37& &&&&&&&&&&&&&&&&&&&&&&&2.56& &&&&&&&&&&&&&&3.04& &&&&&&&&&1.82& &&&&&&&&&0.10& &&&&&&&&&&&&0.50& &&&&&&&&&&&&&&&&0.81& &&&&&&&&&&&&&&&&&&29.37& 23 East&Kalimantan Sulawesi &&&&&&&&&&&&&&&0.358& &&&&&&&&&&&&&&31.10& &&&&&&&&&&&&&&&17.61& &&&&&&&&&&&&&&&&&&&&0.24& &&&&&&&&&&&&&&&5.90& &&&&&&&&&&&&&&&&&&&&&20.32& &&&&&&&&&&&&&&6.34& &&&&&&&13.47& &&&&&&&&&0.65& &&&&&&&&&&&&0.35& &&&&&&&&&&&&&&&&4.82& &&&&&&&&&&&&&&&&&&43.17&!!!!!!!!!!!!!!!0.354!!!!!!!!!!!!!!!!!5.08!!!!!!!!!!!!!!!!!!5.15!!!!!!!!!!!!!!!!!!!!!0.17!!!!!!!!!!!!!!!!2.42!!!!!!!!!!!!!!!!!!!!!!!!1.78!!!!!!!!!!!!!!!2.30!!!!!!!!!!0.25!!!!!!!!!!0.06!!!!!!!!!!!!!0.57!!!!!!!!!!!!!!!!!0.29!!!!!!!!!!!!!!!!!!!16.79! 24 North&Sulawesi &&&&&&&&&&&&&&&0.327& &&&&&&&&&&&&&&&&7.38& &&&&&&&&&&&&&&&&&7.37& &&&&&&&&&&&&&&&&&&&&0.22& &&&&&&&&&&&&&&&2.62& &&&&&&&&&&&&&&&&&&&&&&&1.53& &&&&&&&&&&&&&&3.73& &&&&&&&&&0.38& &&&&&&&&&0.02& &&&&&&&&&&&&0.53& &&&&&&&&&&&&&&&&0.31& &&&&&&&&&&&&&&&&&&12.70& 25 Central&Sulawesi &&&&&&&&&&&&&&&0.347& &&&&&&&&&&&&&&&&6.10& &&&&&&&&&&&&&&&&&6.00& &&&&&&&&&&&&&&&&&&&&0.19& &&&&&&&&&&&&&&&3.26& &&&&&&&&&&&&&&&&&&&&&&&2.15& &&&&&&&&&&&&&&2.53& &&&&&&&&&0.25& &&&&&&&&&0.24& &&&&&&&&&&&&0.98& &&&&&&&&&&&&&&&&0.49& &&&&&&&&&&&&&&&&&&23.69& 26 South&Sulawesi &&&&&&&&&&&&&&&0.375& &&&&&&&&&&&&&&&&5.86& &&&&&&&&&&&&&&&&&6.35& &&&&&&&&&&&&&&&&&&&&0.18& &&&&&&&&&&&&&&&2.52& &&&&&&&&&&&&&&&&&&&&&&&2.56& &&&&&&&&&&&&&&2.53& &&&&&&&&&0.52& &&&&&&&&&0.01& &&&&&&&&&&&&0.38& &&&&&&&&&&&&&&&&0.30& &&&&&&&&&&&&&&&&&&15.47& 27 Southeast&Sulawesi &&&&&&&&&&&&&&&0.363& &&&&&&&&&&&&&&&&4.81& &&&&&&&&&&&&&&&&&4.83& &&&&&&&&&&&&&&&&&&&&0.15& &&&&&&&&&&&&&&&2.04& &&&&&&&&&&&&&&&&&&&&&&&2.13& &&&&&&&&&&&&&&2.05& &&&&&&&&&0.27& &&&&&&&&&0.05& &&&&&&&&&&&&0.50& &&&&&&&&&&&&&&&&0.28& &&&&&&&&&&&&&&&&&&17.63& 28 Gorontalo &&&&&&&&&&&&&&&0.388& &&&&&&&&&&&&&&&&2.60& &&&&&&&&&&&&&&&&&2.60& &&&&&&&&&&&&&&&&&&&&0.13& &&&&&&&&&&&&&&&1.23& &&&&&&&&&&&&&&&&&&&&&&&0.86& &&&&&&&&&&&&&&1.48& &&&&&&&&&0.03& &&&&&&&&&0.03& &&&&&&&&&&&&0.16& &&&&&&&&&&&&&&&&0.07& &&&&&&&&&&&&&&&&&&&&7.90& 29 West&Sulawesi Maluku!and!Papua &&&&&&&&&&&&&&&0.324& &&&&&&&&&&&&&&&&3.73& &&&&&&&&&&&&&&&&&3.73& &&&&&&&&&&&&&&&&&&&&0.15& &&&&&&&&&&&&&&&2.83& &&&&&&&&&&&&&&&&&&&&&&&1.44& &&&&&&&&&&&&&&1.49& &&&&&&&&&0.03& &&&&&&&&&0.03& &&&&&&&&&&&&0.86& &&&&&&&&&&&&&&&&0.31& &&&&&&&&&&&&&&&&&&23.32&!!!!!!!!!!!!!!!0.352!!!!!!!!!!!!!!!!!5.94!!!!!!!!!!!!!!!!!!5.11!!!!!!!!!!!!!!!!!!!!!0.19!!!!!!!!!!!!!!!!2.05!!!!!!!!!!!!!!!!!!!!!!!!1.82!!!!!!!!!!!!!!!2.18!!!!!!!!!!1.55!!!!!!!!!!0.27!!!!!!!!!!!!!0.25!!!!!!!!!!!!!!!!!0.69!!!!!!!!!!!!!!!!!!!26.37!

Table 3, Continued No Province Human&capital &Educational& attainment&(years)& &Intergovernmental& transfers& &DAU&per&capita*& (2000&Rp)& &Proportion&of&hh& with&electricity&& (%)& Living&condition&and&community&infrastructure &Proportion&of& &Proportion&of& &Proportion& hh&with&&clean& hh&with&clean& asphalted&road& water&(%)& sanitation&(%)& to&total&road&(%)& &Distance&fom& Jakarta&(km)& &InDmigration& rate*&(per& 1000& population)& SOURCE: Author s calculation, SUSENAS, Statistics Indonesia, CEIC data. Note: * refer to the average of figures between 2005-2010. Migration &OutDmigration& rate*&(per&1000& population)& Sumatra &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.15& &&&&&&&&&&&&&&&&&&&&&&&&&122,788& &&&&&&&&&&&&&&&&&&&&&&&&&88.11& &&&&&&&&&&&&&&&&&40.27& &&&&&&&&&&&&&&&&&43.75& &&&&&&&&&&&&&&&&&&&&&&54.55& &&&&&&&&&&&&&&&&&&&&822& &&&&&&&&&&&&&&&&&35.82& &&&&&&&&&&&&&&&&&&&20.11& 1 Aceh &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.64& &&&&&&&&&&&&&&&&&&&&&&&&&&&57,794& &&&&&&&&&&&&&&&&&&&&&&&&&89.97& &&&&&&&&&&&&&&&&&30.08& &&&&&&&&&&&&&&&&&38.70& &&&&&&&&&&&&&&&&&&&&&&51.76& &&&&&&&&&&&&&&&&&1,826& &&&&&&&&&&&&&&&&&12.70& &&&&&&&&&&&&&&&&&&&17.05& 2 North&Sumatra &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.69& &&&&&&&&&&&&&&&&&&&&&&&&&&&25,170& &&&&&&&&&&&&&&&&&&&&&&&&&92.42& &&&&&&&&&&&&&&&&&48.15& &&&&&&&&&&&&&&&&&51.55& &&&&&&&&&&&&&&&&&&&&&&52.52& &&&&&&&&&&&&&&&&&1,414& &&&&&&&&&&&&&&&&&&&9.01& &&&&&&&&&&&&&&&&&&&22.32& 3 West&Sumatra &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.33& &&&&&&&&&&&&&&&&&&&&&&&&&&&61,384& &&&&&&&&&&&&&&&&&&&&&&&&&88.57& &&&&&&&&&&&&&&&&&44.31& &&&&&&&&&&&&&&&&&38.63& &&&&&&&&&&&&&&&&&&&&&&49.09& &&&&&&&&&&&&&&&&&&&&924& &&&&&&&&&&&&&&&&&26.49& &&&&&&&&&&&&&&&&&&&31.05& 4 Riau &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.52& &&&&&&&&&&&&&&&&&&&&&&&&&&&41,362& &&&&&&&&&&&&&&&&&&&&&&&&&86.57& &&&&&&&&&&&&&&&&&43.40& &&&&&&&&&&&&&&&&&48.47& &&&&&&&&&&&&&&&&&&&&&&39.68& &&&&&&&&&&&&&&&&&&&&955& &&&&&&&&&&&&&&&&&48.53& &&&&&&&&&&&&&&&&&&&21.46& 5 Jambi &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.74& &&&&&&&&&&&&&&&&&&&&&&&&&&&61,459& &&&&&&&&&&&&&&&&&&&&&&&&&85.09& &&&&&&&&&&&&&&&&&49.33& &&&&&&&&&&&&&&&&&41.14& &&&&&&&&&&&&&&&&&&&&&&53.39& &&&&&&&&&&&&&&&&&&&&621& &&&&&&&&&&&&&&&&&31.69& &&&&&&&&&&&&&&&&&&&18.78& 6 South&Sumatra &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.69& &&&&&&&&&&&&&&&&&&&&&&&&&&&30,859& &&&&&&&&&&&&&&&&&&&&&&&&&84.99& &&&&&&&&&&&&&&&&&46.74& &&&&&&&&&&&&&&&&&38.98& &&&&&&&&&&&&&&&&&&&&&&55.93& &&&&&&&&&&&&&&&&&&&&430& &&&&&&&&&&&&&&&&&13.00& &&&&&&&&&&&&&&&&&&&16.82& 7 Bengkulu &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.13& &&&&&&&&&&&&&&&&&&&&&&&&&127,854& &&&&&&&&&&&&&&&&&&&&&&&&&82.05& &&&&&&&&&&&&&&&&&29.76& &&&&&&&&&&&&&&&&&33.72& &&&&&&&&&&&&&&&&&&&&&&60.26& &&&&&&&&&&&&&&&&&&&&570& &&&&&&&&&&&&&&&&&23.86& &&&&&&&&&&&&&&&&&&&16.97& 8 Lampung &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.53& &&&&&&&&&&&&&&&&&&&&&&&&&&&34,129& &&&&&&&&&&&&&&&&&&&&&&&&&85.35& &&&&&&&&&&&&&&&&&39.59& &&&&&&&&&&&&&&&&&36.77& &&&&&&&&&&&&&&&&&&&&&&56.17& &&&&&&&&&&&&&&&&&&&&191& &&&&&&&&&&&&&&&&&12.26& &&&&&&&&&&&&&&&&&&&17.60& 9 Bangka&Belitung &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.31& &&&&&&&&&&&&&&&&&&&&&&&&&677,151& &&&&&&&&&&&&&&&&&&&&&&&&&93.45& &&&&&&&&&&&&&&&&&35.13& &&&&&&&&&&&&&&&&&55.98& &&&&&&&&&&&&&&&&&&&&&&74.40& &&&&&&&&&&&&&&&&&&&&456& &&&&&&&&&&&&&&&&&39.41& &&&&&&&&&&&&&&&&&&&17.07& 10 Riau&Islands Java &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.88& &&&&&&&&&&&&&&&&&&&&&&&&&110,724& &&&&&&&&&&&&&&&&&&&&&&&&&92.65& &&&&&&&&&&&&&&&&&36.21& &&&&&&&&&&&&&&&&&53.57& &&&&&&&&&&&&&&&&&&&&&&52.28& &&&&&&&&&&&&&&&&&&&&832& &&&&&&&&&&&&&&141.25& &&&&&&&&&&&&&&&&&&&22.02& &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.26& &&&&&&&&&&&&&&&&&&&&&&&&&&&24,943& &&&&&&&&&&&&&&&&&&&&&&&&&98.45& &&&&&&&&&&&&&&&&&45.61& &&&&&&&&&&&&&&&&&58.86& &&&&&&&&&&&&&&&&&&&&&&75.78& &&&&&&&&&&&&&&&&&&&&340& &&&&&&&&&&&&&&&&&33.81& &&&&&&&&&&&&&&&&&&&33.98& 11 DKI&Jakarta &&&&&&&&&&&&&&&&&&&&&&&&&&&10.76& &&&&&&&&&&&&&&&&&&&&&&&&&&&19,007& &&&&&&&&&&&&&&&&&&&&&&&&&99.73& &&&&&&&&&&&&&&&&&38.81& &&&&&&&&&&&&&&&&&78.01& &&&&&&&&&&&&&&&&&&&&&&84.95& &&&&&&&&&&&&&&&&&&&&&&&&K&&&&&&&&&&&&&&&&&&&&68.72& &&&&&&&&&&&&&&&&&&&91.19& 12 West&Java &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.71& &&&&&&&&&&&&&&&&&&&&&&&&&&&10,029& &&&&&&&&&&&&&&&&&&&&&&&&&98.61& &&&&&&&&&&&&&&&&&37.66& &&&&&&&&&&&&&&&&&48.37& &&&&&&&&&&&&&&&&&&&&&&77.83& &&&&&&&&&&&&&&&&&&&&120& &&&&&&&&&&&&&&&&&21.83& &&&&&&&&&&&&&&&&&&&12.75& 13 Central&Java &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.02& &&&&&&&&&&&&&&&&&&&&&&&&&&&12,662& &&&&&&&&&&&&&&&&&&&&&&&&&98.59& &&&&&&&&&&&&&&&&&56.22& &&&&&&&&&&&&&&&&&51.28& &&&&&&&&&&&&&&&&&&&&&&74.94& &&&&&&&&&&&&&&&&&&&&406& &&&&&&&&&&&&&&&&&&&9.78& &&&&&&&&&&&&&&&&&&&25.52& 14 DI&Yogyakarta &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.81& &&&&&&&&&&&&&&&&&&&&&&&&&&&69,051& &&&&&&&&&&&&&&&&&&&&&&&&&99.05& &&&&&&&&&&&&&&&&&59.30& &&&&&&&&&&&&&&&&&72.70& &&&&&&&&&&&&&&&&&&&&&&71.66& &&&&&&&&&&&&&&&&&&&&429& &&&&&&&&&&&&&&&&&61.88& &&&&&&&&&&&&&&&&&&&28.36& 15 East&Java &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.09& &&&&&&&&&&&&&&&&&&&&&&&&&&&13,425& &&&&&&&&&&&&&&&&&&&&&&&&&98.39& &&&&&&&&&&&&&&&&&54.60& &&&&&&&&&&&&&&&&&46.81& &&&&&&&&&&&&&&&&&&&&&&76.94& &&&&&&&&&&&&&&&&&&&&665& &&&&&&&&&&&&&&&&&&&6.84& &&&&&&&&&&&&&&&&&&&12.10& 16 Banten Bali&and&Nusa&Tenggara &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.17& &&&&&&&&&&&&&&&&&&&&&&&&&&&25,484& &&&&&&&&&&&&&&&&&&&&&&&&&96.36& &&&&&&&&&&&&&&&&&27.04& &&&&&&&&&&&&&&&&&56.00& &&&&&&&&&&&&&&&&&&&&&&68.33& &&&&&&&&&&&&&&&&&&&&&&&79& &&&&&&&&&&&&&&&&&38.05& &&&&&&&&&&&&&&&&&&&16.42& &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.10& &&&&&&&&&&&&&&&&&&&&&&&&&&&58,193& &&&&&&&&&&&&&&&&&&&&&&&&&76.81& &&&&&&&&&&&&&&&&&48.72& &&&&&&&&&&&&&&&&&43.60& &&&&&&&&&&&&&&&&&&&&&&62.77& &&&&&&&&&&&&&&&&&1,315& &&&&&&&&&&&&&&&&&14.51& &&&&&&&&&&&&&&&&&&&10.33& 17 Bali &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.89& &&&&&&&&&&&&&&&&&&&&&&&&&&&57,944& &&&&&&&&&&&&&&&&&&&&&&&&&97.95& &&&&&&&&&&&&&&&&&55.75& &&&&&&&&&&&&&&&&&75.12& &&&&&&&&&&&&&&&&&&&&&&81.14& &&&&&&&&&&&&&&&&&&&&933& &&&&&&&&&&&&&&&&&25.64& &&&&&&&&&&&&&&&&&&&11.50& 18 West&Nusa& &&&&&&&&&&&&&&&&&&&&&&&&&&&&&6.74& &&&&&&&&&&&&&&&&&&&&&&&&&&&49,031& &&&&&&&&&&&&&&&&&&&&&&&&&87.13& &&&&&&&&&&&&&&&&&43.70& &&&&&&&&&&&&&&&&&37.85& &&&&&&&&&&&&&&&&&&&&&&59.78& &&&&&&&&&&&&&&&&&1,115& &&&&&&&&&&&&&&&&&&&8.27& &&&&&&&&&&&&&&&&&&&&&8.15& 19 East&Nusa&Tenggara &&&&&&&&&&&&&&&&&&&&&&&&&&&&&6.67& &&&&&&&&&&&&&&&&&&&&&&&&&&&67,605& &&&&&&&&&&&&&&&&&&&&&&&&&45.34& &&&&&&&&&&&&&&&&&46.70& &&&&&&&&&&&&&&&&&17.82& &&&&&&&&&&&&&&&&&&&&&&47.40& &&&&&&&&&&&&&&&&&1,896& &&&&&&&&&&&&&&&&&&&9.61& &&&&&&&&&&&&&&&&&&&11.34& Kalimantan &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.77& &&&&&&&&&&&&&&&&&&&&&&&&&&&76,221& &&&&&&&&&&&&&&&&&&&&&&&&&85.03& &&&&&&&&&&&&&&&&&49.38& &&&&&&&&&&&&&&&&&38.95& &&&&&&&&&&&&&&&&&&&&&&46.05& &&&&&&&&&&&&&&&&&&&&963& &&&&&&&&&&&&&&&&&31.31& &&&&&&&&&&&&&&&&&&&15.30& 20 West&Kalimantan &&&&&&&&&&&&&&&&&&&&&&&&&&&&&6.74& &&&&&&&&&&&&&&&&&&&&&&&&&&&78,784& &&&&&&&&&&&&&&&&&&&&&&&&&77.53& &&&&&&&&&&&&&&&&&54.36& &&&&&&&&&&&&&&&&&37.25& &&&&&&&&&&&&&&&&&&&&&&43.32& &&&&&&&&&&&&&&&&&&&&737& &&&&&&&&&&&&&&&&&&&6.49& &&&&&&&&&&&&&&&&&&&&&8.31& 21 Central&Kalimantan &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.98& &&&&&&&&&&&&&&&&&&&&&&&&&137,312& &&&&&&&&&&&&&&&&&&&&&&&&&76.29& &&&&&&&&&&&&&&&&&37.50& &&&&&&&&&&&&&&&&&26.23& &&&&&&&&&&&&&&&&&&&&&&37.29& &&&&&&&&&&&&&&&&&&&&893& &&&&&&&&&&&&&&&&&33.90& &&&&&&&&&&&&&&&&&&&18.51& 22 South&Kalimantan &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.51& &&&&&&&&&&&&&&&&&&&&&&&&&&&74,586& &&&&&&&&&&&&&&&&&&&&&&&&&92.96& &&&&&&&&&&&&&&&&&52.12& &&&&&&&&&&&&&&&&&37.29& &&&&&&&&&&&&&&&&&&&&&&61.98& &&&&&&&&&&&&&&&&&&&&915& &&&&&&&&&&&&&&&&&24.52& &&&&&&&&&&&&&&&&&&&14.37& 23 East&Kalimantan Sulawesi &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.86& &&&&&&&&&&&&&&&&&&&&&&&&&&&14,200& &&&&&&&&&&&&&&&&&&&&&&&&&93.33& &&&&&&&&&&&&&&&&&53.55& &&&&&&&&&&&&&&&&&55.04& &&&&&&&&&&&&&&&&&&&&&&41.61& &&&&&&&&&&&&&&&&&1,307& &&&&&&&&&&&&&&&&&60.34& &&&&&&&&&&&&&&&&&&&20.02& &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.67& &&&&&&&&&&&&&&&&&&&&&&&&&118,045& &&&&&&&&&&&&&&&&&&&&&&&&&81.55& &&&&&&&&&&&&&&&&&44.41& &&&&&&&&&&&&&&&&&44.38& &&&&&&&&&&&&&&&&&&&&&&51.92& &&&&&&&&&&&&&&&&&1,705& &&&&&&&&&&&&&&&&&17.31& &&&&&&&&&&&&&&&&&&&15.03& 24 North&Sulawesi &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.84& &&&&&&&&&&&&&&&&&&&&&&&&&117,688& &&&&&&&&&&&&&&&&&&&&&&&&&95.78& &&&&&&&&&&&&&&&&&46.57& &&&&&&&&&&&&&&&&&57.76& &&&&&&&&&&&&&&&&&&&&&&63.51& &&&&&&&&&&&&&&&&&2,174& &&&&&&&&&&&&&&&&&17.38& &&&&&&&&&&&&&&&&&&&17.49& 25 Central&Sulawesi &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.86& &&&&&&&&&&&&&&&&&&&&&&&&&107,159& &&&&&&&&&&&&&&&&&&&&&&&&&76.87& &&&&&&&&&&&&&&&&&39.60& &&&&&&&&&&&&&&&&&40.55& &&&&&&&&&&&&&&&&&&&&&&58.56& &&&&&&&&&&&&&&&&&1,560& &&&&&&&&&&&&&&&&&20.28& &&&&&&&&&&&&&&&&&&&11.95& 26 South&Sulawesi &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.47& &&&&&&&&&&&&&&&&&&&&&&&&&&&38,780& &&&&&&&&&&&&&&&&&&&&&&&&&89.53& &&&&&&&&&&&&&&&&&47.05& &&&&&&&&&&&&&&&&&52.70& &&&&&&&&&&&&&&&&&&&&&&49.42& &&&&&&&&&&&&&&&&&1,400& &&&&&&&&&&&&&&&&&14.23& &&&&&&&&&&&&&&&&&&&22.15& 27 Southeast&Sulawesi &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.88& &&&&&&&&&&&&&&&&&&&&&&&&&105,358& &&&&&&&&&&&&&&&&&&&&&&&&&76.22& &&&&&&&&&&&&&&&&&54.64& &&&&&&&&&&&&&&&&&42.39& &&&&&&&&&&&&&&&&&&&&&&49.54& &&&&&&&&&&&&&&&&&1,753& &&&&&&&&&&&&&&&&&23.80& &&&&&&&&&&&&&&&&&&&16.67& 28 Gorontalo &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.11& &&&&&&&&&&&&&&&&&&&&&&&&&171,289& &&&&&&&&&&&&&&&&&&&&&&&&&76.44& &&&&&&&&&&&&&&&&&40.79& &&&&&&&&&&&&&&&&&37.59& &&&&&&&&&&&&&&&&&&&&&&49.51& &&&&&&&&&&&&&&&&&1,950& &&&&&&&&&&&&&&&&&21.01& &&&&&&&&&&&&&&&&&&&18.04& 29 West&Sulawesi Maluku&and&Papua &&&&&&&&&&&&&&&&&&&&&&&&&&&&&6.86& &&&&&&&&&&&&&&&&&&&&&&&&&167,995& &&&&&&&&&&&&&&&&&&&&&&&&&74.44& &&&&&&&&&&&&&&&&&37.84& &&&&&&&&&&&&&&&&&35.30& &&&&&&&&&&&&&&&&&&&&&&40.97& &&&&&&&&&&&&&&&&&1,393& &&&&&&&&&&&&&&&&&&&7.15& &&&&&&&&&&&&&&&&&&&&&3.85& &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.90& &&&&&&&&&&&&&&&&&&&&&&&&&244,709& &&&&&&&&&&&&&&&&&&&&&&&&&65.54& &&&&&&&&&&&&&&&&&44.35& &&&&&&&&&&&&&&&&&33.81& &&&&&&&&&&&&&&&&&&&&&&51.64& &&&&&&&&&&&&&&&&&2,916& &&&&&&&&&&&&&&&&&19.24& &&&&&&&&&&&&&&&&&&&15.69& 30 Maluku &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.66& &&&&&&&&&&&&&&&&&&&&&&&&&224,703& &&&&&&&&&&&&&&&&&&&&&&&&&75.05& &&&&&&&&&&&&&&&&&53.64& &&&&&&&&&&&&&&&&&38.19& &&&&&&&&&&&&&&&&&&&&&&53.77& &&&&&&&&&&&&&&&&&2,383& &&&&&&&&&&&&&&&&&14.68& &&&&&&&&&&&&&&&&&&&23.11& 31 North&Maluku &&&&&&&&&&&&&&&&&&&&&&&&&&&&&8.55& &&&&&&&&&&&&&&&&&&&&&&&&&270,191& &&&&&&&&&&&&&&&&&&&&&&&&&74.07& &&&&&&&&&&&&&&&&&46.14& &&&&&&&&&&&&&&&&&44.17& &&&&&&&&&&&&&&&&&&&&&&63.84& &&&&&&&&&&&&&&&&&2,425& &&&&&&&&&&&&&&&&&18.62& &&&&&&&&&&&&&&&&&&&16.92& 32 West&Papua &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.87& &&&&&&&&&&&&&&&&&&&&&&&&&341,037& &&&&&&&&&&&&&&&&&&&&&&&&&70.84& &&&&&&&&&&&&&&&&&43.60& &&&&&&&&&&&&&&&&&32.36& &&&&&&&&&&&&&&&&&&&&&&49.53& &&&&&&&&&&&&&&&&&3,080& &&&&&&&&&&&&&&&&&18.11& &&&&&&&&&&&&&&&&&&&10.56& 33 Papua Average&Indonesia &&&&&&&&&&&&&&&&&&&&&&&&&&&&&6.52& &&&&&&&&&&&&&&&&&&&&&&&&&142,907& &&&&&&&&&&&&&&&&&&&&&&&&&42.18& &&&&&&&&&&&&&&&&&34.02& &&&&&&&&&&&&&&&&&20.53& &&&&&&&&&&&&&&&&&&&&&&39.42& &&&&&&&&&&&&&&&&&3,776& &&&&&&&&&&&&&&&&&25.54& &&&&&&&&&&&&&&&&&&&12.15& &&&&&&&&&&&&&&&&&&&&&&&&&&&&&7.91& &&&&&&&&&&&&&&&&&&&&&&&&&107,397& &&&&&&&&&&&&&&&&&&&&&&&&&84.66& &&&&&&&&&&&&&&&&&44.36& &&&&&&&&&&&&&&&&&44.81& &&&&&&&&&&&&&&&&&&&&&&57.29& &&&&&&&&&&&&&&&&&1,200& &&&&&&&&&&&&&&&&&27.72& &&&&&&&&&&&&&&&&&&&19.17&

10 P ROVINCIAL P OVERTY R ATES IN I NDONESIA, 2006-2011 INCOME Prior studies underline that improving growth contributes to alleviating poverty (Ravallion 1995, Dollar and Kraay 2002, Balisacan et al. 2003, Miranti 2007 and 2011). In order to give a more complete picture of income, we have used income indicators from both regional accounts and the household consumption survey. In terms of regional GDP per capita (i.e., what the provinces produce), the Java corridor scored lower than the Kalimantan corridor, but the ranks flip if oil and gas are excluded. 1 Jakarta, the capital, had the highest regional GDP per capita and East Kalimantan, the resource-rich province, had the next-highest regional GDP per capita. The other resource-rich provinces, Riau and West Papua, were next in per capita GDP. At the other extreme were the provinces of Nusa Tenggara, Maluku and Gorontalo, where the regional GDP per capita is lowest. Although the per capita regional GDP of Bali is similar to that of Java, the Bali and Nusa Tenggara corridor under MP3EI had the lowest regional GDP per capita. An examination of the data shows that in general, the higher the GDP per capita, the lower the incidence of poverty. Some provinces such as East Nusa Tenggara and West Nusa Tenggara have both high poverty figures and low income per capita. As explained earlier, the anomalies are usually found for natural resource rich provinces such as Papua. We also investigate the components of income, identifying the provinces that can be classified as natural resource rich: natural resource rich provinces are those whose per capita GDP exceeds the average during the observation period for total combined nonfood crops, forestry, and mining and quarrying. 2 Nonfood crops include plantation crops such as palm oil, tea, coffee, and rubber, as well as such smallholder crops as spices. According to this definition, nine provinces are classified as natural resource rich. They are all located in the Outer Islands (non-java): Aceh, Riau, South Sumatra, Bangka Belitung, three Kalimantan provinces except West Kalimantan, Papua, and West Papua. These resource-rich provinces export most of their products. According to our analysis, income distribution tends to be more equal in provinces where nonfood crops are important than in mineral-rich provinces. 3 As Table 3 shows, despite being rich, Aceh, West Papua, and Papua still recorded relatively high poverty rate. The lack of correlation between natural resources wealth and the welfare of the population in these provinces has not changed for many years. This strengthens the argument that not only do natural resources have minimal impact on poverty but they also may be related to social conflict. As argued by Ross (2001), mineral-dependent areas tend to have significantly greater inequality than areas that are not mineral dependent, which means a smaller share of income goes to the poor. 1 In the past, most of the value added of the Indonesian economy came from this sector, although most of the benefits of oil and gas went to Jakarta or Java, not the producing regions, particularly before the decentralization period. Thus, oil and gas is usually excluded from income calculation. 2 We chose resource rich regional GDP per capita rather than proportion of natural resources to regional GDP as the basis for classifying the natural resource provinces. 3 The correlation coefficients between regional GDP per capita and Gini coefficients based on the data used in this paper was -0.31 for nonfood crops, -0.08 for forestry and 0.07 for mining.

C URRENT D EVELOPMENT I NDICATORS 11 Still following the economic corridor division for Indonesia, we look at regional GDP in the agricultural, mining, manufacturing, and services sectors. Both the agricultural and manufacturing sectors have been said to have poverty-reducing effects (for example, Hill 2000) because these sectors create demand for labor. The agricultural sector was crucial for poverty alleviation in rural areas because most rural populations work in this sector. Agriculture s impact on poverty is felt most through food prices, because food makes up a large share of poor populations spending and farm income channels for those who work in the agricultural sector (Cervantes-Godoy and Dewbre 2010). Poor people benefit if they receive more income from their labor when prices rise but they lose in paying more for food, so higher food prices may mean a net loss for the poor. Manufacturing from the mid-1980s to the early 1990s, a period of trade liberalization, was the engine for poverty alleviation (Hill 2000). One reason Jakarta has a low poverty incidence is probably because of the prolonged impact of job creation in this manufacturing sector since the mid-1980s. Furthermore, government spending and the concentration of trade, services, transport, and communications in the capital also contribute to the low poverty rate. The services sector became a major employer in Indonesia after the crisis, and now about 40 percent of total employment is in this sector. Miranti et al. (2013) calculated employment elasticity in the services sector (the ratio of annual employment growth over yearly GDP growth) for the period 2001 2010, and found the elasticity relatively high, at 0.66 compared to 0.15 for agriculture and 0.37 for manufacturing. Ways to change the mining sector so it can contribute to poverty reduction through job creation, revenue generation, and economic growth have been discussed in the literature (Pegg 2006). The other alternative measure of income in provinces is monthly mean expenditure per capita, taken from the National Households Socio-Economic Survey of SUSENAS. This measures consumption of the population rather than what the region has produced. The highest average monthly mean expenditure per capita was recorded for the Sumatra corridor, followed by Java and Kalimantan. A third of the nine provinces classified as natural resource rich had lower mean expenditure per capita than the national average, strengthening the argument that a province s strong natural resources endowment does not necessarily translate to high consumption by the population residing in that province. What, then, is the association between income per capita and poverty incidence? The preliminary observations indicate that in general, the higher the income, the lower the incidence of poverty. Natural-resource rich provinces, however, especially those with substantial income from mining and forestry, are exceptions many of these have a high incidence of poverty despite high per capita incomes. Due to the small number of provinces with substantial forestry income, it is difficult to reach a clear conclusion on the relationship between income and poverty incidence in provinces rich in timber. INEQUALITY The earlier discussion argued that areas with high inequality are more likely to have a smaller share of income accruing to the poorest part of the population. Figure 2 compares data from 2007 and 2011 (where complete inequality data for each province are available) and shows that regional inequality, as measured by the Gini coefficient, except for Lampung, increased between 2007 and 2011 despite the decline in the incidence of poverty.

12 P ROVINCIAL P OVERTY R ATES IN I NDONESIA, 2006-2011 Papua has the highest inequality among Indonesian provinces, and Bangka Belitung has the lowest inequality (and the most rapid annual poverty reduction, as discussed earlier). Jakarta in 2011 recorded higher inequality than the national average. Figure 2 Regional Inequality, 2007-2011 0.50 0.45 Gini&Coefficient 0.40 0.35 0.30 0.25 0.20 Indonesia Gorontalo DKI&Jakarta Papua South&Sulawesi West&Java Maluku Southeast&Sulawesi Bali DI&Yogyakarta West&Papua West&Kalimantan Banten North&Sulawesi Central&Sulawesi East&Kalimantan Central&Java Lampung South&Kalimantan East&Java East&Nusa&Tenggara West&Nusa&Tenggara Bengkulu Riau West&Sumatra North&Sumatra West&Sulawesi Central&Kalimantan South&Sumatra Jambi North&Maluku Aceh Riau&Islands Bangka&Belitung 2007 2011 SOURCE: SUSENAS, Statistics Indonesia, various years. HUMAN CAPITAL In terms of human capital, measured by mean years of schooling, Table 3 also shows that Java is the most educated island. Major universities are located mostly on this island. Jakarta, which has the lowest poverty incidence, stood out as the province with the highest mean years of schooling nearly 11 years, which is higher than the compulsory 9 years of education in primary and junior secondary schools. No other province reached an average mean of more than 9 years of schooling, although Riau Island, Yogyakarta, East Kalimantan, and North Sulawesi came close. Several provinces, including West and East Nusa Tenggara, West Kalimantan, West Sulawes and Papua, still lag behind, with less than 7 years of schooling on average. This preliminary data analysis indicates that higher human capital is associated with lower poverty incidence. This may indicate a problem of limited access to schools, as many children in these provinces live in remote areas far from schools. Although schooling is compulsory, there is no penalty for parents who do not send their children to school (Miranti et al. 2013). Causality probably runs both ways wealthier provinces have better access to schools and better schools. Thus, we would expect the impact of poverty today will affect the accumulation of human capital which will then have an impact on poverty incidence in the future.

C URRENT D EVELOPMENT I NDICATORS 13 LIVING CONDITIONS AND COMMUNITY INFRASTRUCTURE Living conditions also can affect poverty, though causality again probably runs both ways. In this paper, we look at five indicators: (1) proportion of households with electricity, (2) proportion of households with protected clean drinking water source, (3) proportion of households with clean sanitation facilities, (4) road infrastructure, and (5) distance from Jakarta. Protected clean water includes water from protected wells and springs, piped water or drilled or pumped wells that are located at least 10 meters from sewerage, and water disposal. For access to electricity, there are substantial differences between Jakarta, where almost 100 percent of households have access to electricity, and Papua and East Nusa Tenggara, where only 40 percent of households have access to electricity. In general, the greater the access to electricity, the lower the poverty rates. The relationship between low poverty rates and access to clean water is ambiguous, however. Only about 45 percent of households had access to clean water. Jakarta, West Java, and Banten had the least access to clean water, which may indicate how polluted the water is in these provinces. According to Miranti et al. (2013), SUSENAS data from 2008 indicate that more than one-third of total households in the top expenditure quintile drink bottled or refillable water. Many of these households live in urban areas, such as Jakarta, where pollution is usually worse than in rural areas and they therefore buy bottled water for drinking. In terms of sanitation, Java and Bali provinces had the greatest access, and Maluku and the Papua corridor had the least, with only 20.5 percent of households in Papua having access to clean sanitation. Greater mobility of capital and labor, and integration of markets are supported by the availability of roads and other transport infrastructure. Paved (that is all-weather) roads give the poor better access to economic activities, especially employment opportunities. They also support increased productivity in both agricultural and nonagricultural sectors and provide better access to education and health facilities. The length of paved road might not be the best indicator of transport availability, however, because some provinces rely on other transportation methods such as river transportation as the main mode of transportation. As expected, Java had the best access in terms of road infrastructure, in contrast to Kalimantan, where most transportation is via river. Also included is a variable of the distance of each province from Jakarta, the center of development and decision making. It is expected that the farther a province is physically from the capital and the center of development, the less the development spillover. Maluku and Papua provinces are located the farthest from Jakarta. INTERGOVERNMENTAL TRANSFER Although decentralization means that fiscal authority is shifted to subnational levels of government, intergovernmental transfers are still an important element of center-region relations. Although the intergovernmental transfer objective is not for poverty alleviation per se, failure to provide public services to the population, due to lack of fiscal capacity, will have an impact on poverty. If local governments are left to make decisions on expenditure, disparities in service delivery can affect poverty alleviation. This is especially true for education and health facilities, which are important in empowering the poor (Hofman and Guerra 2004). The capacity to finance services out of their own resources varies between regions. In short, as discussed by Rao, Bird and Litvack (1998), intergovernmental transfers are potentially important in alleviating poverty.