One of the most important benefits of higher growth is that it helps greatly in tackling the dreadful problem of mass poverty. As Stephen notes, in Indonesia half the population lives on less than $2 per day. This means that like most other developing countries in Asia, Indonesia suffers from “mass poverty”. The type of mass poverty which exists in poor countries is a very different phenomenon to the poverty which exists in rich countries. And because the nature of poverty is different, the policy responses required are different as well.

In rich countries most poverty is localised and affects relatively small numbers of people. Targeted anti-poverty interventions are both affordable and often reasonably effective in rich countries. The situation is quite different in countries like Indonesia where mass poverty affects huge numbers of people. In poor countries, targeted anti-poverty interventions are of limited use because the basic problem (low national income per capita) affects the whole nation. Furthermore, governments in poor countries generally lack both the financial and administrative capacity to focus on specific pockets of poverty. Thus high growth, sustained for a long time, is needed to overcome mass poverty in Indonesia.