8. Anti-globalisation, poverty and inequality in Indonesia

Since the 1997-99 Asian Financial Crisis (AFC), the rate of poverty reduction in Indonesia has slowed and economic inequality has increased. At the same time, protectionism also increased, both at the global level and within Indonesia. The objective of this paper is to find the extent, if any, that protectionism, both at the global level and within Indonesia, explains the observed slowing down in poverty reduction and rising We do this using a general equilibrium model of the Indonesian economy which enables detailed calculation of the poverty and inequality impacts of policy changes and external shocks. We conclude that increased protection had harmful effects on both poverty reduction and inequality, but that its impact was relatively small. It was not the major cause of either the slowdown in poverty reduction or increased inequality.