Assessment of economic inequality during three decades in Aceh Province of Indonesia

Abstract

Political reform and the terrible aftermath of the 2004 tsunami in Sumatra have caused a state of income inequality among the Aceh people. The aim of this study was to determine the income inequality of Aceh people using Theil index while the analysis of panel data was used to predict the relationship between income inequality and economic growth for groups of people in three regions of Aceh Province. The results showed the income inequality of Aceh people remained low over two decades and increased to approximately eight times after the fall of New Order regime. Impact of post-2004 tsunami disaster recovery on the tsunami affected areas of Aceh Province has helped to reduce economic inequality. Administrative decentralisation of Aceh Province after political reform as part of democratisation in Indonesia has made a contribution to the realisation of basic human rights, leading to improve the living standards and accelerate economic growth.