| Abstract: | Indonesia's long-run ‘pro-poor growth’ record is among the best in Asia. It shows that appropriate policies can free societies from poverty's worst manifestations in a generation, a crucial message as democracy begins to influence the policy process. This paper places Indonesia's record in regional perspective, analysing determinants of income distribution in Asia and connecting this analysis to Indonesia's pro-poor growth process and the policy mechanisms that encourage pro-poor growth. Using a data set for eight Asian countries, it examines patterns of change in incomes and distribution across countries and over time. Building on Indonesian experience, the paper presents a pro-poor growth model encompassing three levels: improving the ‘capabilities’ of the poor, lowering transactions costs in the economy, especially between rural and urban areas, and increasing demand for goods and services produced by the poor. It finds that rapid pro-poor growth requires simultaneous and balanced interaction between growth and distribution processes. |
