Political Economic Reforms Necessary to Alleviate Poverty in Indonesia

Abstract

This article critically interrogates the persistent and widespread poverty in Indonesia despite over two decades of democratic governance following the 1998 Reformasi. Contrary to official narratives of economic progress, the World Bank’s 2023 global poverty assessment identifies Indonesia as the country with the second-largest population of extreme poor in the world, with approximately 52 million people living below the international poverty line of $2.15 per day (2017 PPP). This finding starkly contradicts Indonesia’s national poverty statistics and exposes the limitations of its post-authoritarian development model. Drawing on political economy theory, institutional analysis, and critical development studies, this research employs a mixed-methods approach—including analysis of national survey data (Susenas 2020–2023), policy document review, and semi-structured interviews with 35 stakeholders (government officials, civil society leaders, and community representatives)—to examine why the promises of Reformasi have failed to translate into broad-based welfare improvements. The findings reveal that structural constraints—including regressive fiscal policies, elite capture of economic institutions, land inequality, and fragmented social protection—have perpetuated systemic poverty. The study argues that alleviating poverty in Indonesia requires not incremental policy tweaks but transformative political-economic reforms that redistribute power, wealth, and opportunity. Such reforms must be grounded in democratic deepening, inclusive governance, and a reorientation of development priorities away from growth-centric orthodoxy toward human dignity and social justice. This research contributes to global debates on the political roots of poverty and offers a culturally and institutionally contextualized roadmap for equitable development in Indonesia.