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Growth, Employment and Poverty Reduction in Indonesia

By Iyanatul Islam and Anis Chowdhury

This timely study examines the impact of policies on growth, employment, and poverty reduction in Indonesia, reviewing the periods both before and after the country’s 1997 financial crisis and drawing important implications for today’s policymakers.

The authors analyze the Indonesian labor market and explore approaches to foster growth and poverty reduction. They argue that “deindustrialization,” decline in employment elasticity, and lack of growth of real wages seem to be the key features of labor market performance in the post-1997 period. The book makes the case for a new reform agenda that empowers labor market institutions and prioritizes investment in public infrastructure and expenditure on human development over inflation targeting and fiscal conservatism.

Focusing on the agriculture, manufacturing, construction, and services sectors, as well as assessing macroeconomic policies, this book addresses current challenges with respect to past and emerging trends. It advocates recognizing Indonesia’s strengths and fostering a skilled workforce that can adapt and respond to the imperatives of industrial transformation.

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