Poverty, inequality and public health in Indonesia: does wealthier mean healthier?

For the past several years, Indonesian economic development has been performing well, with the economy growing at 5.80 percent per annum during 2010–2014. The GDP per capita also has been increasing over time. The country’s GDP per capita in 2010 was already 50 percent higher than its lowest point during the economic crisis in 1999 and was 70 percent higher in 2014. One of the achievements of Indonesian development is that the poverty rate has been continuing to decline over time, both in rural and in urban areas. The World Bank (2015) has argued that sustained economic growth in Indonesia since the year 2000 has helped to reduce poverty. The latest data in 2014 shows the poverty rate is currently sitting at just under 11 percent. This is a level that had not been achievable earlier even during the pre-crisis period (based on the new BPS poverty calculation). Nevertheless, while the poverty rate declined at around 1 percentage point on average per annum in 2007–2010, it has declined by only 0.6 percentage points per annum since 2010. Furthermore, around 28 million people still live below the national poverty line. On another spectrum, in terms of inequality, the Gini coefficient has been increasing since 2000 and has been stable at 0.41 since 2011, a level that has never been experienced by Indonesia before. Rising inequality in Indonesia is a national story, and has been rising in both urban and rural areas (Manning and Miranti, 2015; World Bank, 2015).

The outline of the chapter is as follows: The next section discusses trends and patterns of poverty and inequality in Indonesia from a comparative and regional perspective. The third section analyzes recent health sector development and performance in Indonesia. The fourth section investigates empirically the evidence of the potential interplay between income, poverty and inequality, and its impact on the health performance of the country. The chapter concludes with a discussion of the lessons learned and policy implications.