Publication: Aspiring Indonesia—Expanding the Middle Class
Loading...
Date
2019-09
ISSN
Published
2019-09
Author(s)
Editor(s)
Abstract
Indonesia has seen tremendous progress in poverty reduction over the past couple of decades and, as a result, has made a successful transition from low-income to middle-income country status. As millions have moved out of poverty and extreme poverty, we have also witnessed the rise of Indonesia’s middle class, which now accounts for 20 percent of the total population, or 52 million Indonesians. This group important for Indonesia’s upward trajectory, but it still too small for the ambitions of Indonesia. Expanding the middle class will boost economic growth, strengthen an influential constituency for better governance, and widen and deepen the tax base. An expansion of the middle class, if accompanied by continued growth in the incomes of the poor and vulnerable, will also help to decrease inequality and prevent polarization of the country. One of the key development questions that Indonesia faces is how to expand the middle class. What will be required to bring the 115 million people who are no longer in poverty and vulnerability into the middle class? The future of Indonesia lies partly in the fate of this aspiring middle class, 45 percent of the population, so that they can both share in and help to drive the country’s growing prosperity. Government policy can play an instrumental role in expanding the middle class. This can be done by increasing the level and quality of education, and the skills of the population, and making sure there are well-paid jobs waiting for those in the aspiring middle class. It also means ensuring access to social protection to help lift these aspirers into the middle class and keep them there once they arrive, as well as improving the quality of the public services upon which they currently depend. Resolve to expand the middle class will place greater stress on government budgets. The government will need increasingly rely on the middle class, whose income taxes will finance much of the investment that a growing Indonesia will need. This will require a new social contract with the current – and future – middle class so that they will embrace the policies that both benefit themselves while also helping to expand their ranks, rather than closing off opportunities for others, and creating political polarization—as has occurred in some countries in the region in recent years.
Link to Data Set
Citation
“World Bank. 2019. Aspiring Indonesia—Expanding the Middle Class. © World Bank. http://hdl.handle.net/10986/33237 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Pathways to the Middle Class in Turkey : How Have Reducing Poverty and Boosting Shared Prosperity Helped?(World Bank, Washington, DC, 2014-04)Turkey's poverty reduction performance in the 2000s has been remarkably consistent. Extreme and moderate poverty have fallen considerably since 2003. Between 2002 and 2011, extreme poverty fell from 13 percent to 5 percent, while moderate poverty halved from 44 percent to 22 percent (respectively, defined using the World Bank's Europe and Central Asia regional poverty lines of 2.5 and 5 USD/PPP). Most of this poverty reduction (89 percent) has been driven by growth, a performance consistent with most countries in Europe and Central Asia. This is substantially different form the recent performance of other regions, such as Latin America, where redistribution contributed to poverty reduction almost four times more than in Turkey. Turkey has also achieved sustained consumption growth of the bottom 40 percent of the population, even during the years of the world recession. Turkey's performance in poverty reduction and increased shared prosperity has been complemented by the systematic expansion of the middle class by 20 percentage points. This paper analyzes the main drivers of poverty reduction, shared prosperity, and changes in inequality in Turkey from 2002 to 2011. The analysis shows that labor markets, demographics, pensions, and social assistance have played a critical role in this process. It further explores some of the mechanisms that have facilitated these changes.Publication Expanding Opportunities and Building Competencies for Young People : A New Agenda for Secondary Education(Washington, DC, 2005)The report offers policy options to support developing countries and transition economies in adapting their secondary education systems to the demands arising from the successful expansion of primary education and the socio-economic challenges presented by globalization and the knowledge-based economy. The work is the result of an extensive consultative process that involved education specialists worldwide.Publication Indonesia's PNPM Generasi Program : Final Impact Evaluation Report(World Bank, Jakarta, 2011-06)Indonesia has made remarkable strides in key human development indicators over the past few decades. Primary school enrollment is close to universal for both boys and girls, and the child mortality rate has declined rapidly. Furthermore, achievements in these indicators reveal large geographical disparities, with poorer outcomes in rural and remote provinces and districts. Improving access to basic quality health and education services is a key component of an overall poverty reduction strategy for Indonesia. The project builds on the Indonesian government's existing community-driven development program, known as the National Community Empowerment Program in rural areas (PNPM) or formerly, the Kecamatan Development Program (KDP). This document describes the findings from the three-wave evaluation series carried out from 2007 to 2010. The baseline survey took place from June 2007 to August 2007. The second wave was conducted from October 2008 to January 2009, after 15 to 18 months of Generasi implementation. The third and final evaluation survey was implemented from October 2009 to January 2010 after 27 to 30 months of project implementation.Publication Expanding Access and Enhancing the Economic Benefits of Education in the Maldives : Challenges and Prospects(Washington, DC, 2012-05)Human capital is the central determinant of economic well-being and social advancement in the modern global economy. The key characteristic that distinguishes between advanced economies, middle-income economies and low-income economies is the knowledge content of their economic activities and production processes. Industry, agriculture and especially services have become increasingly knowledge and skill intensive in recent years. Further, the dominance of knowledge and skills is increasing at an accelerating rate. Among advanced economies, for instance, the education levels of their populations is the single most important factor determining their economic performance [Hanushek and Welch (2006), Hanushek and Woessmann (2008)]. Among middle-income and low-income countries, too, economies that have high education attainment enjoy considerable welfare gains [Fasih (2008), Patrinos and Psacharopoulos (2011)]. Human resource development is particularly important for the economic development of small states [Martin and Bray (2011)]. Education also produces a variety of social benefits. These include healthier and better nourished families and children; the creation of the enlightened citizenry needed for a modern liberal democracy; and the promotion of social mobility [OECD (2012)]. This paper offers an overview of the general education system and the current status of access and participation in the Maldives. This is followed by a discussion of the economic and social benefits of investment in education. The paper concludes by discussing options to expand access and participation at education levels where the Maldives lags behind other comparable small island economies.Publication Ceará PforR : Technical Assessment(Washington, DC, 2014-01)The Government of Ceará has asked for the Bank s support in implementing its multi-year plan (Plano Plurianual or PPA) for 2012-15. The objectives of the Plan are to promote equitable social development, sustainable economic development and to contribute to the emergence of a more efficient and participatory public sector.The activities to be supported have been chosen on the basis of the importance to these goals, the state s commitment to and the Bank s capacity, in view of its experience in other Brazilian states and elsewhere, to contribute to improving their design and execution. The PforR will build on previous Bank support for public sector reform by strengthening results-based management within sector agencies and providing incentives for collaboration among agencies and with the private sector. This will contribute to strengthening the implementation of Government programs in the following areas: skills development, early childhood development and water quality.
Users also downloaded
Showing related downloaded files
Publication Governance Matters IV : Governance Indicators for 1996-2004(World Bank, Washington, DC, 2005-06)The authors present the latest update of their aggregate governance indicators, together with new analysis of several issues related to the use of these measures. The governance indicators measure the following six dimensions of governance: (1) voice and accountability; (2) political instability and violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law, and (6) control of corruption. They cover 209 countries and territories for 1996, 1998, 2000, 2002, and 2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 organizations. The authors present estimates of the six dimensions of governance for each period, as well as margins of error capturing the range of likely values for each country. These margins of error are not unique to perceptions-based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. In fact, the authors give examples of how individual objective measures provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. The authors also analyze in detail changes over time in their estimates of governance; provide a framework for assessing the statistical significance of changes in governance; and suggest a simple rule of thumb for identifying statistically significant changes in country governance over time. The ability to identify significant changes in governance over time is much higher for aggregate indicators than for any individual indicator. While the authors find that the quality of governance in a number of countries has changed significantly (in both directions), they also provide evidence suggesting that there are no trends, for better or worse, in global averages of governance. Finally, they interpret the strong observed correlation between income and governance, and argue against recent efforts to apply a discount to governance performance in low-income countries.Publication Government Matters III : Governance Indicators for 1996-2002(World Bank, Washington, DC, 2003-08)The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.Publication Governance Matters VIII : Aggregate and Individual Governance Indicators 1996–2008(2009-06-01)This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.Publication Measuring Financial Inclusion : The Global Findex Database(World Bank, Washington, DC, 2012-04)This paper provides the first analysis of the Global Financial Inclusion (Global Findex) Database, a new set of indicators that measure how adults in 148 economies save, borrow, make payments, and manage risk. The data show that 50 percent of adults worldwide have an account at a formal financial institution, though account penetration varies widely across regions, income groups and individual characteristics. In addition, 22 percent of adults report having saved at a formal financial institution in the past 12 months, and 9 percent report having taken out a new loan from a bank, credit union or microfinance institution in the past year. Although half of adults around the world remain unbanked, at least 35 percent of them report barriers to account use that might be addressed by public policy. Among the most commonly reported barriers are high cost, physical distance, and lack of proper documentation, though there are significant differences across regions and individual characteristics.Publication Design Thinking for Social Innovation(2010-07)Designers have traditionally focused on enchancing the look and functionality of products.