Mind the Gap; A Review on Fossil-Fuel Subsidy Reform and Social Welfare in Indonesia

43 Pages Posted: 8 Apr 2015

See all articles by Rimawan Pradiptyo

Rimawan Pradiptyo

Universitas Gadjah Mada (UGM) - Department of Economics

Abraham Wirotomo

Universitas Gadjah Mada (UGM) - Faculty of Economics and Business (FEB)

Yudistira Hendra Permana

Vocational School, Universitas Gadjah Mada

Akhmad Susamto

Universitas Gadjah Mada - Department of Economics

Date Written: April 7, 2015

Abstract

Fossil-fuel subsidies have been a major burden on the Indonesian economy for the last 10 years and any attempt to reform the subsidy has been opposed by members of the public. This study reviews the literature on the nature of fossil-fuel subsidies and their impact on the Indonesian economy. It aims to identify the various strategies that have been developed to reform the subsidy and to identify research gaps that may be filled by future studies. The proponents of fuel subsidies argue that subsidies will support economic growth, poverty reduction and promote energy security, however, evidence from various studies, which have been conducted in Indonesia, suggest otherwise. Studies in the down stream oil sub-sector have been conducted quite extensively, however, substantial research gap was found for upstream and middle stream oil sub-sectors.

Keywords: fossil-fuel subsidy, misallocation of resources, income inequality, reallocation of the subsidy, literature review

JEL Classification: C91, D03, D12, Q48

Suggested Citation

Pradiptyo, Rimawan and Wirotomo, Abraham and Permana, Yudistira Hendra and Susamto, Akhmad, Mind the Gap; A Review on Fossil-Fuel Subsidy Reform and Social Welfare in Indonesia (April 7, 2015). Available at SSRN: https://ssrn.com/abstract=2591212 or http://dx.doi.org/10.2139/ssrn.2591212

Rimawan Pradiptyo (Contact Author)

Universitas Gadjah Mada (UGM) - Department of Economics ( email )

Bulaksumur
Sleman
Yogyakarta, Daerah Istimewa Yogyakarta 55281
Indonesia

HOME PAGE: http://rimawan.staff.ugm.ac.id

Abraham Wirotomo

Universitas Gadjah Mada (UGM) - Faculty of Economics and Business (FEB) ( email )

Jl. Humaniora, Bulaksumur
Sleman
Jogjakarta, DI Yogyakarta 55281
Indonesia

Yudistira Hendra Permana

Vocational School, Universitas Gadjah Mada ( email )

Bulaksumur
Yogyakarta, Special Region of Yogyakarta 55281
Indonesia

Akhmad Susamto

Universitas Gadjah Mada - Department of Economics ( email )

Jl.Sosio Humaniora No. 1, Bulaksumur
Sleman, DI Yogyakarta 55281
Indonesia
+6281290113275 (Phone)

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