Good governance does matter for the reduction of poverty<\/p>\n
Alex Arifianto, Researcher, The SMERU Research Institute, Jakarta<\/p>\n
Aarifianto@smeru.or.id<\/p>\n
The 1997\/1998 Asian economic crisis reminded us all that the
\nissue of poverty reduction is very crucial. High economic growth
\nduring the previous three decades was successful in reducing
\nabsolute poverty in the country. However, the poverty rate
\ndoubled after the crisis began, wiping out many years of progress
\nin this area and putting the issue of poverty back into the
\nnational policy agenda.<\/p>\n
In searching for the causes of the crisis, the issue of
\ngovernance was brought into the limelight. The hypothesis put
\nforward was that bad governance -- popularly known as KKN
\n(corruption, collusion, and nepotism) -- had weakened the economy
\nand was one of the key causes of the economic crisis that had
\nthrust millions of people back into poverty.<\/p>\n
After the crisis, there were efforts to initiate various
\nanticorruption reforms. However, these were short-lived. This
\ncould be seen from the fact that many prominent government
\nofficials indicted for corruption during the past few years
\neither received very light sentences or were exonerated
\ncompletely.<\/p>\n
This is an indication that corruption has become so entrenched
\nwithin the government apparatus that the current leaders are
\nunwilling to implement an effective anticorruption strategy,
\nsince doing so would only hurt their rent-seeking interests.<\/p>\n
Corruption affects poor citizens the most because they occupy
\nthe weakest social position and are the most powerless in
\ninfluencing decisions that affect their lives. They are the most
\nvulnerable group and are the most affected by bad governance
\npractices.<\/p>\n
For instance, when the government decided to create various
\nmarketing boards for agricultural and plantation commodities that
\nonly benefit certain government cronies, the poor farmers were
\nseriously harmed. However, they had no choice but to live with
\nit. Occasional protests fell on deaf ears or, even worse, were
\nmet with harsh suppression done by government security forces.<\/p>\n
Economic theories on governance and poverty reduction strongly
\nsuggest that they are interrelated. Bad governance makes poverty
\nreduction efforts ineffective, while poverty reduction programs
\nprovide a fertile ground for corruption. The consensus that
\nemerges from this line of thinking is that efforts to promote
\nlasting poverty reduction can only be achieved through the
\nadoption of good governance practices.<\/p>\n
Good governance is necessary if all aspects of poverty are to
\nbe reduced, not just through an increase in income, but also
\nthrough empowerment and greatly increased economic, political and
\nsocial opportunities for the poor. At the same time, corruption
\nhas made poverty reduction efforts ineffective.<\/p>\n
This is sometimes very direct, for instance in cases where
\nfunds for poverty reduction are diverted to the pockets of
\ncorrupt officials; or indirectly through the increase in the
\nprices of staple consumer goods that the poor cannot afford due
\nto the prevalence of semi-legal and\/or illegal fees and taxes.<\/p>\n
There has been no quantitative study done on the impact of
\ncorruption and bad governance on poverty reduction in Indonesia
\nso far. However, a recent study conducted by the SMERU Research
\nInstitute entitled Governance and Poverty Reduction: Evidence
\nfrom Newly Decentralized Indonesia attempts to find links between
\ncorruption, governance and poverty in several of the country's
\ndistricts.<\/p>\n
The district governance index data in the study were obtained
\nfrom the Regional Autonomy Implementation Monitoring Committee
\n(KPPOD) and the Institute for Social and Economic Research of the
\nUniversity of Indonesia (LPEM-UI), while the district poverty
\nrates were obtained from the Central Statistics Agency (BPS).<\/p>\n
On average, the districts in the sample had a lower poverty
\nrate in 2002 compared to the 1999 rate. However, districts with a
\ndefective bureaucratic culture (i.e., bad governance) have a
\nlower poverty reduction rate compared to districts with a better
\nbureaucratic culture.<\/p>\n
Poverty reduction in the latter group doubled that of the
\nformer (3.41 percent and 6.95 percent respectively). Districts
\nwith a very good bureaucracy experienced further doubling in the
\nrate of poverty reduction; such districts, on average,
\nexperienced a 15 percent reduction in their poverty rates.<\/p>\n
The study also found that economic growth tends to enhance
\npoverty reduction, but government spending tends to stifle it.
\nThis indicates that districts that strive for higher economic
\ngrowth will achieve poverty reduction at a faster rate. On the
\nother hand, there are indications that higher taxes and
\ngovernment spending are counterproductive to the efforts to
\nreduce poverty, or at least they do not contribute to poverty
\nreduction. Thus, it is concluded that there is a positive
\nrelationship between the adoption of good governance practices by
\nregions and a faster poverty reduction rate.<\/p>\n
The policy recommendations of this study are that clear
\nstandards need to be established at the national level to promote
\ngood governance by local authorities. This should be followed by
\nincentives and systemic reforms that will encourage government
\nofficials with both rewards and credible threats -- the carrot
\nand the stick -- both at national and local levels, in practicing
\ngood governance.<\/p>\n
At the same time, civil society needs to establish a consensus
\nand build a coalition to combat bad governance, through media
\ncampaigns, class-action lawsuits and evidence-based publications.<\/p>\n
To conclude, in order to achieve lasting poverty reduction, it
\nis essential for the government (both national and local), with
\nencouragement from civil society groups and other stakeholders,
\nto adopt good governance practices and to implement meaningful
\nanticorruption reform initiatives. It is the poor that bear most
\nof the consequences of bad governance practices and corruption in
\nthis country, and they will be the ones who gain the most from
\ngood governance.<\/p>\n
The views expressed here are solely those of the author.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/good-governance-does-matter-for-the-reduction-of-poverty-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }