Understanding Poverty In The Development Context And Poverty Reduction Policy Using System Dynamics Approach

ASBTRACT Poverty is an undesirable phenomenon of development with the main characteristic of lack of welfare which might lead to some social problems such as criminality, low-level education and poor health condition. Generally, since 2000, Indonesia has been experiencing the decrease number of the poor with its up(s) and down(s) performance. The objective of this study is to explore how the poverty is constructed in the context of socio-economic and how the poverty alleviation policy plays a role in combating the national poverty. In this study, the poverty is seen from the perspective of absolute poverty indicated by the poverty line launched by the Central Bureau of Statistics. Conducted with System Dynamics approach, the model simulation results several following findings: (a) the poverty is simply constructed of the expenditure interaction, expenditure distribution, and poverty line; (b) if the budgeting of the poverty alleviation which has direct impact to the society is not being considered in the model then it will cause to the increasing percentage of the national poverty by 15%-18%; and (c) various mechanisms of policy direction in the macro level and long term period that could be implemented are as followed: (1) price control; (2) improvement of the society expenditure distribution; and (3) wage adjustment particularly for the lowincome group.