Rapid economic growth and poverty decline: a comparison of Indonesia and Thailand 1981-1990

Abstract

This paper contrasts the achievements of Indonesia and Thailand in reducing poverty through the 1980s. It is argued that estimates produced by the World Bank suggesting that the headcount incidence of poverty in Thailand in 1990 was higher than Indonesia were flawed because the poverty line used was not truly comparible. But there can be little doubt that the reduction in the headcount incidence of poverty was greater in Indonesia than in Thailand over the 1980s, as was the decline in the absolute numbers of poor people, even though rates of GDP growth were faster in Thailand. Three possible reasons for the superior performance of Indonesia are suggested: regional disparities in economic growth have been more pronounced in Thailand, the expansion of post-primary education has been very slow, and Indonesia was starting from a much higher incidence of poverty in 1980 than was Thailand. © 1997 John Wiley & Sons, Ltd.