Examines the impact of policies on growth, employment, and poverty reduction in Indonesia, reviewing the periods both before and after the 1997 financial crisis and drawing implications for today's policy-makers. Focusing on the sectors of agriculture, manufacturing, and construction and services, as well as assessing macroeconomic policies, this study addresses current challenges with respect to past and emerging trends, and advocates recognizing the country's strengths and fostering a skilled workforce that can adapt and respond to the imperatives of industrial transformation.

‘Diagnosing the Indonesian Economy: Toward Inclusive and Green Growth’ discusses the critical constrains to inclusive economic growth in Indonesia. The volume includes a broad overview of Indonesia’s development since the 1960s, and features an analytic framework for the study that aims to identify the most binding constraints. The chapters analyze macroeconomic management since the Asian financial crisis; the status of Indonesia’s industrial transformation; the challenges pertaining to Indonesia’s infrastructure; the situation of human capital and employment; the record on poverty reduction; the impact and status of the decentralization effort; and the challenges attendant to the country’s environment and natural resources.

‘Diagnosing the Indonesian Economy: Toward Inclusive and Green Growth’ discusses the critical constrains to inclusive economic growth in Indonesia. The volume includes a broad overview of Indonesia’s development since the 1960s, and features an analytic framework for the study that aims to identify the most binding constraints. The chapters analyze macroeconomic management since the Asian financial crisis; the status of Indonesia’s industrial transformation; the challenges pertaining to Indonesia’s infrastructure; the situation of human capital and employment; the record on poverty reduction; the impact and status of the decentralization effort; and the challenges attendant to the country’s environment and natural resources.

Understanding the nexus between employment, living standards and poverty is a major challenge in Indonesia. Trends in poverty are heavily dependent on labour market opportunities and social spending in education and health. The question is how to create opportunities and spend money wisely - a subject of intense debate in Indonesia. The government has brought a renewed focus to poverty reduction since the end of the Asian financial crisis, especially under the current president, Susilo Bambang Yudhoyono. This book shows how Indonesia is travelling with regard to employment, social policy and poverty. It identifies promising new directions for strategies to alleviate poverty, some of which are already showing results.

This report comes at a time when policy makers are challenged by the COVID-19 crisis that is generating a profound reflection on economic and social well-being. Before COVID-19 hit, Indonesia had experienced remarkable economic growth, making substantial progress in poverty reduction and gains in employment. However, there are large differences in outcomes across Indonesian provinces, which often reflect the quality of local infrastructure, services, education, and jobs. This joint Asian Development Bank (ADB) and Organisation for Economic Co-operation and Development (OECD) study sheds light on challenges and opportunities to promote employment and skills outcomes at the local level in Indonesia. The analysis presented in this OECD/ADB report shows the importance of strengthening local institutions managing and delivering employment and skills policies.