Sector/Thematic Studies

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http://hdl.handle.net/10986/2110

Economic and Sectoral Work are original analytic reports authored by the World Bank and intended to influence programs and policy in client countries. They convey Bank-endorsed recommendations and represent the formal opinion of a World Bank unit on the topic. This set includes the sectoral and thematic studies which are not Core Diagnostic Studies. Other analytic and advisory activities (AAA), including technical assistance studies, are included in these sectoral/thematic collections.

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Graduating from a Conditional Cash Transfer Program in Indonesia: Results of a Household Survey of Prosperous-Independent Graduates of the Family Hope Program in 2020

(World Bank, Washington, DC, 2021-12) Syamsulhakim, Ekki ; Khadijah, Nurzanty

The Family Hope Program (Program Keluarga Harapan - PKH), a conditional cash transfer (CCT) program launched in 2007, has become one of the country’s flagship social protection programs, targeting the poorest families in Indonesia to reduce their expenditure burden and improve their wellbeing through education, health, and social welfare services. In the last 13 years, PKH has expanded to 10 million beneficiary families across all districts/cities in Indonesia. Studies have provided evidence of PKH’s desirable impacts, which include usage of health services, education participation, and stunting reduction (Cahyadi, et al., 2020; Alatas, 2011). However, there is still limited evidence on how families who have already left the program are doing, particularly in regard to their socio-economic status, employment and livelihood activities, program complementarities, and sustainability of the previously incentivized behavior.
Beyond Unicorns: Harnessing Digital Technologies for Inclusion in Indonesia

(Washington, DC: World Bank, 2021-07-28) World Bank

Similar to many other countries around the world, the COVID-19 (coronavirus) pandemic has hit Indonesia hard. Latest estimates suggest that about 5.1 million people—equivalent to 2.4 percent of the working-age population—have lost their jobs, while an additional 24 million have had to work reduced hours due to the pandemic. As many as 50 percent of workers have experienced a reduction in earnings. The impact on living standards has been devastating, with more than 2.2 million Indonesians estimated to have been pushed into COVID-19-induced poverty in 2020. One unexpected silver lining from the crisis, however, has been the turbo-charged adoption of digital technologies. Businesses, both large and small, have flocked to digital technologies to try to ensure the continuity of their operations. School closures have forced students and teachers to adapt and explore digitally enabled remote learning options, including the adoption of a variety of EdTech solutions. HealthTech apps enabling remote consultations and the delivery of medicine have seen unprecedented growth in adoption rates. Confined at home due to mobility restrictions, Indonesians have switched to the internet for their entertainment and social needs, driving sharp growth in the usage of digital media (music and video streaming) and communications applications. With this pandemic-induced flight to digital expected to be permanent to a large extent, there is excitement about an even greater acceleration in what was already the fastest growing digital economy in Southeast Asia. But at the same time questions have also emerged about the possibility of the differential access to and adoption of digital technologies compounding existing inequalities. For a country that considers achieving balanced development one of its key priorities, this is an important new challenge.
Indonesia Economic Prospects, June 2021: Boosting the Recovery

(World Bank, Washington, DC, 2021-06-16) World Bank

COVID-19 (coronavirus) has taken a heavy economic and human toll globally and in Indonesia. According to official statistics, over 3.8 million people have died from COVID as of May 2021. The global economy experienced one of the most severe recessions, shrinking by 3.5 percent in 2020 compared to 1.7 percent in 2009 during the global financial crisis. The recession in Indonesia (-2.1 percent) was milder than among Emerging Markets and Developing Economies, EMDEs (-4.3 percent excluding China). Small and medium-sized firms and businesses in contact-intensive services sectors were severely affected. About 1.8 million Indonesians became unemployed between February 2020 and 2021 and another 3.2 million people exited the labour force. Three hundred thousand fewer youth entered the labour market. About 2.8 million people have fallen into poverty as of September 2020 with the government’s social assistance program mitigating a potentially worse outcome. Indonesia's recovery has been relatively gradual until the first quarter of 2021 but has accelerated more recently. Indonesia’s recovery gap – the difference between real GDP and its pre-crisis trend – narrowed from -7.5 to -7.1 percent between Q2 and Q4 2020. By comparison, the average 'recovery gap' among regional and G20 peers shrank from -13.6 to -5.1 percent. The recovery gap remained elevated at -7.9 percent during the first quarter this year. Consumption and investment growth have been subdued due to the still weak labor market and high uncertainty while trade has recovered more strongly. The recovery gap in contact-intensive services sectors, such as transport and accommodation, has also been elevated compared to manufacturing industries due to social distancing and stronger external demand in manufacturing. But retail sales increased by 11 percent between March and April while the manufacturing continued to expand suggesting a stronger rebound during the second quarter.
Investing in People: Social Protection for Indonesia's 2045 Vision

(World Bank, Jakarta, 2020-04-30) Holmemo, Camilla ; Acosta, Pablo ; George, Tina ; Palacios, Robert J. ; Pinxten, Juul ; Sen, Shonali ; Tiwari, Sailesh

The Government of Indonesia's Vision for 2045 sets an ambitious path that will require significant investments in human capital and social protection Indonesia continues to set ambitious goals for its growth and development. The Government of Indonesia's (GoI) vision for 2045—when the country celebrates 100 years of independence—is to achieve high income status and reduce poverty to nearly zero. In addition to sustained growth and income opportunities for all, an inclusive and efficient social protection (SP) system will be essential to meet these ambitious goals. In most countries today, effective risk-sharing and SP policies play important roles in building equity, resilience and opportunity, and in strengthening human capital. Indonesia is no different. Risk sharing interventions can reduce and prevent poverty, and make growth more equitable by safeguarding households' human and physical capital. Over the past two decades, Indonesia's SP system has been fundamentally transformed. In particular, it has moved from the dominance of regressive consumer subsidies and ad-hoc crisis response to targeted and household based social assistance programs, with a massive coverage expansion. In terms of social insurance, recent years have seen an ongoing building and integration of its policies and institutions. This has all been made possible through better spending allocations and a build-up of the needed platforms to deliver programs effectively and efficiently.
Indonesia Country Gender Assessment: Investing in Opportunities for Women

(World Bank, Washington, DC, 2020) World Bank

In 2018, Indonesia’s poverty rate fell below 10 percent for the first time; poverty rates had halved over the previous two decades, driven in large part by strong economic growth in the country. Continued economic growth, rather than changes in distribution, will continue to be a key driver of poverty reduction. The objective of continued economic growth and poverty reduction is apparent in the Government of Indonesia’s new medium-term development plan (Rencana Pembanguanan Jangka Menengah Nasional or RPJMN) (2020-2024). Investments in gender equality to close specific gender gaps have the potential to contribute to greater economic growth for Indonesia, thereby contributing to further poverty reduction. The objectives of this report are to review the current status of gender equality and women’s issues in Indonesia; and to provide an evidence base for the Indonesian Government on specific actions and priority responses needed to close gender gaps to drive the growth and human capital potential of the country. Specifically, the assessment focuses on areas where demonstrated improvements in gender equality can contribute to economic growth, both in the short term through improvements in economic participation, but also over the medium term through investments in human capital. The report starts by providing the assessment framework and context to understand patterns of gender equality in Indonesia in chapter one and chapter two. It then moves to a discussion on women’s economic participation to elucidate the key factors underlying these current trends in chapter three, before moving to a discussion of the current areas Indonesia will need to address to ensure the equivalent human capital accumulation of women across the country in chapter four. It then summarizes some of the early dual health and economic impacts of the novel coronavirus (COVID-19) pandemic in chapter five, before providing a set of strategic priority actions to advance the country’s growth and poverty reduction objectives through investments in gender equality in chapter six.
Indonesia Economic Quarterly, December 2019: Investing in People

(World Bank, Washington, DC, 2019-12) World Bank

Amid challenging global economic conditions and a substantial deterioration of its terms-of-trade, Indonesia’s economic growth decelerated to 5.0 percent in the third quarter of 2019, from 5.1 percent in Q2. Domestic drivers of growth slowed. Fixed investment growth weakened further in Q3 given the significant decline in commodity prices, and as political uncertainty lingered prior to the announcement of the new cabinet. Total consumption also slowed, with Government consumption decelerating markedly. This weakness in domestic demand was mirrored by a large contraction of import volumes, which together with flat exports meant that net exports made a large contribution to growth.
Indonesia: Long-Term Generasi Qualitative Study

(World Bank, Jakarta, 2018-11) World Bank

In 2007, the government of Indonesia (GoI) introduced PNPM Generasi (National Community Empowerment Program—Healthy and Smart Generation, Program Nasional Pemberdayaan Masyarakat—Generasi Sehat dan Cerdas) to address key policy priorities and the Millennium Development Goals—reducing poverty, maternal mortality, and child mortality, as well as ensuring universal coverage of basic education. To facilitate a rigorous evaluation of the program, GoI (working with the World Bank and the Abdul Latif Jameel Poverty Action Lab) randomly assigned Generasi locations for the pilot phase (2007–2009). A randomized evaluation of two different versions of the program (with and without performance bonuses) was conducted in three rounds (Wave I at baseline, Wave II eighteen months after implementation, and Wave III thirty months after implementation). In 2016-2017, the impact evaluation (IE) team fielded a follow-up survey in the same subdistricts as the first three waves. A separate report analyzes the quantitative findings of this final survey. During the final survey round, the IE team also collected qualitative data in geographically distinct treatment and control communities to explore two problems:1) first, whether Generasi’s three components—facilitation, community participation, and the target and performance bonus system—functioning as intended; second, what is the program’s long-term impact on village governance and service delivery, and how it can influence Village Law implementation
Indonesia Economic Quarterly, September 2018: Urbanization for All

(World Bank, Washington, DC, 2018-09) World Bank

Real GDP grew 5.3 percent in the second quarter of 2018 from the previous year, as domestic demand strengthened. Private and government consumption accelerated thanks to higher subsidy and personnelspending, a pick-up in credit growth, higher agricultural incomes, and stable inflation. Strong job markets also helped: the employment rate reached a two-decade high of 65.7 percent in February, with the unemployment rate falling to 5.1 percent. Growth of machinery and equipment investment remained robust, but overall gross fixed capital formation (GFCF) slowed because investments in structures and buildings (three-quarters of GFCF) moderated, partly due to fewer working days. Despite escalating protectionism, both exports and imports grew over the quarter. Because import volumes grew nearly twice as fast as exports, net exports contracted, weighing on overall economic growth.
The Distributional Effects of Tobacco Taxation: The Evidence of White and Clove Cigarettes in Indonesia

(World Bank, Washington, DC, 2018-06-25) Fuchs, Alan ; Del Carmen, Giselle

Despite the well-known positive impact of tobacco taxes on health outcomes, policy makers hesitate to use them because of their possible regressive effect, that is, poorer deciles are proportionally more negatively affected than richer ones. Using an extended cost-benefit analysis to estimate the distributional effect of white and clove cigarettes in Indonesia, this study finds that the long-run impact may be progressive. The final aggregate effect incorporates the negative price effect, but also changes in medical expenditures and in additional working years. The analysis includes estimates of the distributional impacts of price rises on cigarettes under various scenarios using 2015–16 Indonesia National Socioeconomic Surveys. One contribution is to quantify the impacts by allowing price elasticity's to vary across consumption deciles. Overall, clove cigarette taxes exert an effect that depends on the assumptions of conditional price elasticity. If the population is more responsive to tobacco price changes, then people would experience even more gains from the health and work benefits. More research is needed to clarify the distributional effects of tobacco taxation in Indonesia.
Mapping Indonesia’s Civil Service

(World Bank, Jakarta, 2018-05-21) World Bank

Indonesia’s civil service has expanded by 25 percent in the last 12 years, which presents opportunities for the government of Indonesia (GoI) to work toward the goal of reducing poverty and enhancing social welfare. Yet civil servants must be skilled, knowledgeable, and effective at their jobs to maximize their contribution to society and the economy. This report examines an original data set constructed from GoI data on all the country’s active civil servants to examine personal characteristics including age, gender, education level (which proxies for skill), and promotions. It addresses two important questions: 1. Are highly skilled and knowledgeable workers currently being attracted, recruited, and promoted?; 2. Are civil servants from historically underrepresented groups, including women, being given equal opportunities for advancement and promotion? The study recommends government action in three policy areas: 1. Increase promotion opportunities for women and increase their overall representation in senior positions; 2. Distribute skilled civil servants more evenly throughout the country by improving the incentives for highly skilled service providers to rotate into poor and remote regions; 3. Plan for the upcoming wave of retirements within the civil service by recruiting more women from top universities and hiring medical and teaching staff only from licensed and accredited institutions.