This book provides a comprehensive analysis of the constraints facing the development of rural non-farm enterprises in Indonesia. Recent years have seen a substantial effort by the Indonesian government to improve the investment climate. To date, much of this effort has focused on the constraints faced by businesses at the national level. However, if Indonesia is to be successful in creating jobs and reducing poverty across the archipelago, this will require improving the investment climate for the 15.7 million micro and small enterprises that employ more than half of all the non-farm workers in the country. This book brings together leading Indonesian and international academics to consider seven key constraints that RNFEs face: labour regulations and practices; infrastructure; competition and marketing; knowledge transfer and technology; access to credit and financial services; local taxation and user charges; and insecurity. In each case the authors draw on the Indonesian Rural Investment Climate Survey, a unique dataset of more than 2,500 RNFEs, to identify the size and nature of the constraints, the way in which they impact upon enterprise growth and the implications for policy. In addition, a key chapter estimates the strength of the linkage between agriculture and non-agricultural activities in rural areas, showing that agricultural revitalization is an essential complement to the development of the non-farm economy. "Understanding the rural investment climate in both slow- and fast-growing economies has taken on new urgency in the wake of the world food crisis. The rural non-farm economy often provides half or more of the income of farm families and is especially important for food-deficit rural households hard-hit by rising food prices. The Indonesian Rural Investment Climate Assessment is the "gold standard" for how to achieve this understanding. It is a delight to see it published and available to a wide audience." - C. Peter Timmer, Visiting Professor, Program on Food Security and Environment, Stanford University; Non-Resident Fellow, Center for Global Development

After almost a decade of successful macroeconomic management and several bold policy decisions, Indonesia is finally in a position of fiscal strength. Since 2006, Indonesia has freed up "fiscal space" of about US$15 billion. Equivalent to around 7 percent of GDP, this is the largest increase in additional fiscal resources since the 1973-74 oil revenue windfall, providing a tremendous window of opportunity for Indonesia to upgrade its public services."Spending for Development: Making the Most of Indonesia's New Opportunities" is the first Public Expenditure Review to cover national and sub-national spending in Indonesia. It sheds light on the impact of the country's transition towards decentralization and the new ways of which public resources are now administrated and allocated. An essential source of analysis for all stakeholders in public finance in Indonesia, some of the most important findings include:1 Thanks to the fuel subsidies cuts in 2005, Indonesia freed up US$10 billion in 2006 to spend on development programs. An additional US$5 billion also came available from increasing revenues and declining debt service.2 Despite the 2005 domestic fuel price adjustments, Indonesia still spends US$12 billion on subsidies annually, mainly on fuel and electricity. 3 Thirty-six percent of all public spending is now in the hands of sub-national governments.4 While spending on education since the crisis has nearly doubled and spending on health has increased almost 70 percent, spending on infrastructure investment remains significantly less than pre-crisis levels (below 3.4 percent of GDP). 5 Indonesia spends about 50 percent of its total annual capital expenditure in the final quarter of the year.

The book features an analysis of teacher reform in Indonesia, which entailed a doubling of teacher salaries upon certification. It describes the political economy context in which the reform was developed and implemented, and analyzes the impact of the reform on teacher knowledge, skills, and student outcomes.

Rising densities of human settlements, migration and transport to reduce distances to market, and specialization and trade facilitated by fewer international divisions are central to economic development. The transformations along these three dimensions density, distance, and division are most noticeable in North America, Western Europe, and Japan, but countries in Asia and Eastern Europe are changing in ways similar in scope and speed. 'World Development Report 2009: Reshaping Economic Geography' concludes that these spatial transformations are essential, and should be encouraged. The conclusion is not without controversy. Slum-dwellers now number a billion, but the rush to cities continues. Globalization is believed to benefit many, but not the billion people living in lagging areas of developing nations. High poverty and mortality persist among the world's 'bottom billion', while others grow wealthier and live longer lives. Concern for these three billion often comes with the prescription that growth must be made spatially balanced. The WDR has a different message: economic growth is seldom balanced, and efforts to spread it out prematurely will jeopardize progress. The Report: documents how production becomes more concentrated spatially as economies grow. proposes economic integration as the principle for promoting successful spatial transformations. revisits the debates on urbanization, territorial development, and regional integration and shows how today's developers can reshape economic geography.

Indonesia has achieved an impressive 84% electrification ratio, but faces significant challenges in reaching the remaining 16% of its households. This report describes Indonesia’s electrification environment and identifies barriers to achieving universal electricity access. Principles drawn from international best practices such as government commitment, enabling institutional environments, adequate and sustainable financing, and stakeholder coordination are discussed in the context of Indonesia’s energy sector. The report gives recommendations for establishing service standards, streamlining financing, setting appropriate targets, and monitoring and evaluation, as well as near-term steps to help achieve universal electricity access.