Indonesia’s Education Policy: Enabling Innovation and Growth Msc Thesis

B. van Schaik (1294563) [email protected]

August 5, 2009 Indonesia’s Education Policy: Enabling Innovation and Growth

Thesis submitted in partial fulfillment of the requirements for the degree of Master of Science in Technology, Policy and Management by Bas van Schaik born in Vlaardingen, the Netherlands

Section Economics of Innovation Department of Innovation Systems Faculty of Technology, Policy and Management Delft University of Technology Jaffalaan 5, 2628 BX, Delft, The Netherlands

1 Indonesia’s Education Policy

Msc Thesis, B. van Schaik (1294563)2 Indonesia’s Education Policy: Enabling Innovation and Growth

Author : Bas van Schaik Student id : 1294563 E-mail : [email protected]

Abstract

Participating in the global economy provides options to increase economic growth. The knowledge economy allows developing nations to catch up by effectively using knowledge spillovers and increasing market size. Compared to other developing countries like India and China, Indonesia is not experi- encing rapid economic growth. The Indonesian education policy is largely in line with current theories on growth and education, but are its goals attained in practice?

This thesis presents a model for economic growth based on the augmented Solow model (Mankiw, Romer, & Weil, 1992) and recent scientific literature on innovation and returns to education. Through statistical analysis, the variables determining the quality and accessibility of primary and secondary schools are determined. These are used in a comparative analysis to con- struct stereotypical schools. Based on interviews with education experts and students from remote regions, the distribution of these stereotypes over In- donesia is determined and related to economic growth.

The analysis of empirical school data shows that there are four stereotypical schools in Indonesia and each has different levels of quality and accessibility. These stereotypical schools are unequallly distributed over the regions of In- donesia and low quality and less accessible schools in poor, remote regions lead to lower economic growth. The policy goals of quality schools accessible to all citizens of Indonesia are not attained.

Thesis Comittee Chair : Prof. Dr. C.P. van Beers First Supervisor : Dr. Ir. S. Cunningham Second Supervisor : Dr. W.M. de Jong

3 Contents

1 Introduction 8 Problem Background ...... 8 Purpose of this Thesis ...... 9 Scope of Research ...... 9 Structure of this Thesis ...... 10

2 Economic Growth, Education and Indonesia 11 The Knowledge Economy ...... 11 An Introduction to Indonesia ...... 18 Indonesia’s Administrative System ...... 19 Education in Indonesia ...... 22

3 Research Design, Method and Data Sources 28 A Policy Model for Economic Growth ...... 28 Hypothesis Formulation ...... 30 Research Method and Data Sources ...... 31 Factors, Proxies and Variables ...... 34

4 A Field Study into Indonesian Education 36 Statistical Analysis of Empirical School Data ...... 36 School Stereotypes in Indonesia ...... 44 Distribution of Schools and Growth ...... 47 Discussion of the Results ...... 52

5 Conclusions and Recommendations 56 What was Supposed to Happen ...... 56 What Actually is Happening ...... 56 How to Make it Happen ...... 57 Concluding Remarks ...... 58

Appendices 59

4 Indonesia’s Education Policy

A Individual School Data 60 A.1 SMA Negeri 5 ...... 60 A.2 SMA Taman Madya ...... 61 A.3 SMP Negeri 5 ...... 63 A.4 SMP Kristen Kalam Kudus ...... 64 A.5 SD Negeri 2 and 4 ...... 65 A.6 SD Islam ...... 66 A.7 SD LAB UM - English conversation club ...... 67 A.8 Sanggar Kegiatan Belajar (Negeri) ...... 68 A.9 Pusat Kegiatan Belajar Masyarakat ...... 69

B Indonesia School Statistics 71

C Summary of Questionnaire Data 74

D Factor Analysis of the Questionnaire Data 85

E Letters of Reference 92

F Coded List of Sources 96

References 97

Msc Thesis, B. van Schaik (1294563)5 Indonesia’s Education Policy

Preface

My previous education was rather technical and my work mostly was too. This prompted me to broaden my skills and opt for a less technical edu- cation. When I found the part-time Technology, Policy and Management programme, I went for an interview that same afternoon and took the first class that same evening. I love exploring new subjects and learning new skills and this master really met my expectations. After four years, this thesis is the last part. I feel both happy that I completed the programme and sad that it is now ending. I hope to be a life-long student and the moment I am writ- ing this I’m already taking classes for another continuing education program.

A couple of years ago I fell in love with Indonesia and this thesis enabled me to do field work in Indonesia and stay there for more than two months. This was a great experience and I learned much more than just the subject of this study. In this period I also met the sweetest girl on earth and I ended up returning to Indonesia even before this thesis was finished for our engagement.

Acknowledgements

First of all I’d like to thank the thesis committee for their great advice during the whole thesis. Cees van Beers helped me to hit the ground running and Martin de Jong and Scott Cunningham always had time to discuss my work whenever I was lost or in need of advice. I’m especially grateful for their fast (one day) response while I was abroad and needed reference letters. Martin’s contact Lisa Nugraha introduced me to Yohannes Mulyani, a professor of education. Although he is a very busy man, he invited me to his house on Sunday afternoon for a long interview on education in Indonesia. For this I’m very grateful.

I’m also grateful to my old friend from Malang State University, Peni Anggari, who provided a great overview of both the Indonesian education system and the city of Malang, and introduced me to numerous experts. The most im- portant of those was Ferry, who arranged and accompanied me on several school visits. Among others are Mohamed Yamin and Sutrisno. Next I’d like to thank the people at the Malang municipal department of education, who provided me with statistics and permission to visit all schools in the region. I also like to thank Ika Atiningsih for helping me to find accommodation and introducing me to some schools through Wayu. I thank all the students

Msc Thesis, B. van Schaik (1294563)6 Indonesia’s Education Policy at STIBA for providing me details on the schools in their, sometimes very remote, home regions and the fun we had at the badminton club. Especially my housemate Doni Paiman for the endless evening discussions on education, politics and more. Thank also to Joni Susanto from STIBA for his useful in- formation and inviting me in his guest lectures on cross-cultural comparison (at which I learned probably as much as the students). Thanks also to my employer, the Ministry of the Interior and Kingdom Relations, for providing the time and money to do this study.

A special thanks goes to my sister Marijke van Schaik and her partner Er- win Schalkx for supporting me in the darker periods of the last four years. Without them I would not have been able to complete this study. And last but not least I like to thank my fianc´eElvia Eca Rosidah.

Msc Thesis, B. van Schaik (1294563)7 ”It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Wealth of Nations, 1776 Adam Smith

1. Introduction

After the term ”third world” became politically incorrect and was replaced with ”developing nations”, the problems in the countries the term refers to unfortunately did not change with it. Developing countries have low stan- dards of material well being and several other problems related to this. End- ing poverty in developing nations might be possible, but requires outside help. But, with the qoute above in mind, who is to help them out of pure benevolence? In today’s world we understand that specialization and increas- ing the size of the market increases income. International trade can increase the market size and allows all countries to find their comparative advantage. Globalization, done the right way, can increase income for all participants and this might just be the ”own interest” needed to solve the problem of poverty. On a positive sidenote, countries that are depending on each other for goods are less likely to engage in warfare too.

Problem Background

The knowledge economy provides options for developing nations to catch up. Countries that are further from the technological frontier grow faster than countries close to it. In the long run, this convergence reduces differenes in national income (Dollar & Kraay, 2004). For now, developing nations are confronted with the question of how to enter the era of the knowledge economy. This requires major investements and gradually opening up of the national economy. A lot of research has recently been devoted to partici- pating in international trade (Sachs & Warner, 1995; Stiglitz, 2002a; Chang, 2007). It is however less clear what the optimal strategy of investing in the knowledge economy is.

Solow (Solow, 1956) constructed an economic model for growth and first rec- ognized the role of knowledge. The Solow model later was adapted (Mankiw et al., 1992) to include human capital as an endogenous factor. This aug- mented model explains 80% of the variation in income growth for 188 coun-

8 Indonesia’s Education Policy tries. A large body of scientific evidence confirms positive returns to edu- cation (Bils & Klenow, 2000; Krueger & Lindahl, 2001; Hanushek, 2005). Education is a public good and consequently not (sufficiently) provided by the free market. This justifies that the larger part of funds from governments and international public institutions is devoted to increasing human capi- tal. Education increases cognitive skills and these in turn increase economic growth through higher levels of innovation and increasing (technological) ab- sorption capability. Several studies (Duflo, 2001; Glewwe, 2002; Deininger, 2003; Banerjee & Duflo, 2004) describe how quality and quantity of schooling influence the results of education.

Purpose of this Thesis

Education is key to lifting a nation out of poverty and most developing na- tions invest heavily in it. Some however are growing faster than others. Of the four most populous countries in the world, three are developing nations: China, India and Indonesia. China and India have experienced more eco- nomic growth in the past decades than Indonesia. It is interesting to find out why. The Indonesian government is, at least since the ”Reformasi” of 1998, a relatively democratic one. Its education policy focuses on those fac- tors that, according to theory, increase cognitive skills. But there seems to be a substantial gap between the education policy and reality in Indonesia. This thesis confirms the gap and provides recommendations based on theory to re- duce the difference between Indonesian education policy and reality, thereby increasing the level of cognitive skills and ultimately economic growth. The research question is:

Are the goals of the Indonesian education policy attained in practice?

Scope of Research

Of course education is not the only factor that matters. As the original Solow model states, there are two other factors playing an important role. Firstly, the amount of (physical) capital available for investment is important. This can be increased by stimulating savings. Secondly, population growth is important. If scarce goods have to be spread over more people, this obviously reduces growth. Both these factors, alltough important, are not analyzed in detail in this thesis. For a good overview of the theory of economic growth, especially for developing countries, see the books by John Kay (Kay, 2004) and Jeffrey Sachs (Sachs, 2005). Besides increasing cognitive skills, investing

Msc Thesis, B. van Schaik (1294563)9 Indonesia’s Education Policy in education probably generates externalities not accounted for in this study. Possible effects are reduced crime rates and less people depending on welfare. And let’s not forget the intrinsic motivation for education: the excitement of learning something new.

Structure of this Thesis

After this introduction, the scientific literature on innovation and economic growth is reviewed in chapter 2. This chapter also describes the Indonesian administrative system and its education system and policy. Chapter 3 Intro- duces a policy model based on this theory and proposes a research hypothesis. The method of analysis and choice of data sources are justified after which the results are presented, analyzed and discussed in chapter 4. The last chapter states the conclusion of this thesis and provides recommendations. Detailed statistics, data from the empirical study and other supporting evidence are found in the appendices. Lastly, a list of references is included.

Msc Thesis, B. van Schaik (1294563) 10 2. Economic Growth, Education and Indonesia

This chapter provides the theoretical basis for the central theme of this thesis. The first section reviews the theory of innovation and growth, which is the fundament of the knowledge economy. Next, the scientific literature linking education with innovation and economic growth is reviewed. The three sec- tions in the second part of the chapter introduce Indonesia, its administrative system, its education system and education policy

The Knowledge Economy

This section introduces the broader theoretical framework of the knowlegde economy, elaborates on the specific problems for developing countries and explains the importance of education.

The Theory of Convergence Economies of scale normally decrease the marginal producation costs. Participating in the international economy in- creases the market size (Sachs & Warner, 1995; Dollar & Kraay, 2004) and for years this was one of the strategies1 enforced by the IMF, World Bank and WTO. This policy, commonly referred to as the Washington Consensus, is based on the premise that opening up national markets would encour- age economic growth. All countries would grow and developing countries would grow faster than developed countries, providing a chance to catch up. Mankiw (Mankiw et al., 1992) however shows that variations in growth are better explained by initial values of the independent variables than by their growth: Developing countries are not growing faster than developed coun- tries. One Indonesian scholar (Hartungi, 2006) argues that immediate open trade can harm infant local industries, who have little chance in compet-

1The other strategy was fighting inflation at all costs, which in the end mainly helped foreign investors getting their money out of collapsing economies.

11 Indonesia’s Education Policy ing head-to-head with technically advanced multinationals. Stiglitz (Stiglitz, 2002a; “Woods:1”, n.d.) describes that the obligations coming with help packages from the IMF sometimes make liberalization happen too fast. It might be better to offer local firms some protection first and gradually open up for full competition (Chang, 2007). Countries are thus wise to develop their own human capital before fully engaging in open trade.

Growth Theory and Innovation In neoclassical economics, the output of the economy (Y) is a function of Labor (L) and Capital (K). Solow (Solow, 1956) showed that such an economic system would always converge to a steady state of growth for changes in amounts of L and K. He also discov- ered that the traditional factors of L and K were not enough to explain the economic growth countries were experiencing. The residual (Solow residual) could largely be explained by introducing the factor knowledge (A):

Y = A(t)f(K,L) Due to the cumulative character of knowledge, an exponential growth rate is possible. Where the Solow model could explain roughly 50% of the variation in growth outcomes of the countries around the world, this could be to increased to 80% by adding the factor human capital. The augmented Solow model (Mankiw et al., 1992) described that a better educated work- force would increase productivity. Increased productivity means more income and thus growth. Productivity is increased through the process of innovation. Unfortunately, innovation is hard to measure (Carlsson, Jacobsson, Holmen, & Rickne, 2002), especially in developing countries (Canton, 2007). Patents2 are virtually the only way in which governments can influence innovation directly (Sena, 2004). By taking a holistic approach, the effects of investing in human capital on economic growth can be measured.

Education and Human Capital Several universities and international public institutions devote continuing research to building economic growth models incorporating human capital. Two IMF researchers (Kim & Kim, 1999) present a theoretical model for multisector growth where education enhances general human capital. In this model, education and international trade affect growth positively in the long run by increasing workers’ ability to adapt and move into productive industries. If enough general knowledge (opposed to industry specific knowledge) is available, this (combined with open trade) can lift a country out of poverty.

2Without the temporary monopoly granted by a patent, a firm has no incentive to invest because the chances of recouping the investment are low.

Msc Thesis, B. van Schaik (1294563) 12 Indonesia’s Education Policy

We know that student cognitive skills are directly related to individual earnings later in life (Hanushek, 2005). Most studies focus on the Mincerian returns to education. Average Mincerian returns (increase in productivity) to education are between 6,9% to 10,1% worldwide3 (Banerjee & Duflo, 2004). Altough the devations from these averages can be large, differences in edu- cation can account for about two-third of the variation in economic growth. Bils (Bils & Klenow, 2000) however suggests that countries that change ed- ucation policy are also likely to change other policies and there might also be a reversed causality were (the anticipation of) growth increases educa- tion efforts. He presents a model in which only a third of the variation in economic growth can be explained by differences in education. This the- ory is not supported by most scholars in the field. Later research (Krueger & Lindahl, 2001) confirms the earlier two-thirds again based on the same data set4. Krueger combines micro and macro economic data and concludes that Mincerian returns to education give a good description of the data even for different economic and educational systems. There is some doubt as to wether better education increases farm income. Although theoretical studies suggest farm income increases as farmers become better educated, empirical work gives mixed results. In areas where farming consists of mostly routine activities, there is little gain from education. The study also shows that, in general, benefits from secondary and post-secondary schooling are higher than from primary education. Krueger confirms that the returns to educa- tion can increase by exogenous, skill-biased technology change.

Another extensive study on education data from 62 countries (Jamison, Jami- son, & Hanushek, 2007) shows that higher levels of education increase growth of national income. The rate of technological progress in a country increases as a result of investing in education. Romer (Romer, 1990) takes techno- logical change as an endogenous factor and divided human capital into cap- ital devoted to research and capital devoted to production. Devoting more human capital to research increases innovation, which in turn increases pro- ductivity. Of course, workers have to possess enough skill to be able to use new technology; technology and cognitive skills are complementary (Bils & Klenow, 2000). Some developing countries have been given the advice to not invest scarce resources in basic research, since they could easily access the worldwide available pool of knowledge. This is a dangerous advice since a lack of basic research means such a country can not understand research

3Long term social returns to education in Europe are even 10% to 15% (Canton, 2007) 4Most of the research on returns to education uses the Barro-Lee data set (Barro & Lee, 1993, 1996). But the Mankiw paper (Mankiw et al., 1992) mentioned earlier got to similar results based on the Penn World Tables (Summers & Heston, 1988)

Msc Thesis, B. van Schaik (1294563) 13 Indonesia’s Education Policy done elsewhere (Pavitt, 2001). Fully training researchers is too expensive for firms and government subsidies are needed. Maintaining the pool of skilled workers and the knowledge absorption capability is the responsibility of the government.

Although there is some uncertainty about the size and direction of the causal- ity between education and economic growth, all scholars reviewed do ac- knowledge that it exists. In a study of U.S. immigrants that received their education in their countries of origin, Hanushek (Hanushek, 2005) shows that immigrants educated in countries that score high on education characteristics have significantly higher wages. With these results, we can safely conclude that education increases economic growth by increasing human capital and the causality is strongest in the direction from education to income growth.

Improving Education There are several studies that identify and ana- lyze the impact of various factors on education. Glewwe (Glewwe, 2002) provides a good overview, along with the strengths and weaknesses of the studies. Generally the level of cognitive skills5 is measured in two groups. These groups differ on the factors of interest but are as similar as possi- ble for all other factors. The most preferable studies are randomized trials, where schools (the research is mostly on the level of schools, not students) are assigned to the treatment or control group randomly. This type of study is costly and attaining true random selection is difficult. Another type is the natural experiment, where the two groups are quite similar but for some reason (policy change, natural disaster, etc.) differ on the factor of interest. Each type of study has its own shortcomings, but by generalizing over all studies some universal factors that improve quality emerge. These factors, and those described in other studies mentioned here, are used in chapter 3 to determine the variables to be analyzed.

Most studies focus on the quality of schooling. Hanushek (Hanushek, 2005) concludes that teacher quality matters more than the funds allocated to schools. He also notes that more schooling with less quality learning is on the average better than higher learning in just few schools. Duflo (Duflo, 2001) analyzed data from Indonesian schools in the 1970s. In that period In- donesia had a national program that increased elementary school enrollment form 69 to 83 percent. She correlates the current wages to the education in the region of birth of the wage earner and concludes that one extra school

5Fortunately, allmost all studies used Raven’s test for ability. The test is developed in the 1950s and widely used to test student cognitive skills.

Msc Thesis, B. van Schaik (1294563) 14 Indonesia’s Education Policy per 1000 children led to an increase in wage of 1.5 to 2.7 percent. This coun- ters the general concern that the results of increasing quantity will be offset by reduced quality. Besides the quality of education, the quantity plays an important role too.

While the quantity of schools in a region might be sufficient, this not nec- essarily means the schools are accessible. Deininger (Deininger, 2003) shows that school fee reduction resulted in higher student enrollment rates (but in this particular study also a higher percentage of students failing tests). It is thus better to speak of accessibility than just quantity. Another factor related to accessibility is the distance to school. Talen (Talen, 2001) ana- lyzes the relation between student test scores and their travel time to school in West Virginia, US. Living further away from school negatively influences test scores. A similar effect was found in China (Knight, Shi, & Quheng, 2008). Less travel time results in less absence and less tardiness among stu- dents.

The Importance of Institutions In ”Guns, Germs and Steel” (Diamond, 1997), Diamond explains that the gaps in power and technology between hu- man societies originate in geographical differences. Several authors (Sachs & Warner, 1995; Kay, 2003) confirm that an abundance of natural resources in a country or region can actually depress economic growth. When natural resources are discovered, the value of that country’s currency will increase making exports from the country less attractive. After the decline of pri- vate investments in the Netherlands due to the discovery of natural gas, this phenomenon is called ”Dutch Disease”. If a natural resource is discov- ered in a country, the revenues mostly accrue to its government. Due to increased spending by the government, demand is increased, price levels rise and ultimately the exchange rate rises. A raise of the exchange rate makes the countries manufacturing sector less competitive and private investments decrease. After discovering a natural rescource that can be exploited, the economy will likely focus on exploitation of the natural resource and invest- ments in the manufacturing industry are low or non-existent.

In many former colonies, the local elite used the leftover exploitative institu- tions for disproportional political power and elite rule (Acemoglu, Johnson, & Robinson, 2001). Economics is about the distribution of scarce goods. In countries with no (or the wrong) institutions this distribution is not optimal. The rich elite extracts the wealth and the often growing poor masses have little. Biologist note that populations will always grow too big and compete

Msc Thesis, B. van Schaik (1294563) 15 Indonesia’s Education Policy for resources (Dawkins, 1976) and economists (Solow, 1956) also explain that a larger population causes less economic growth. But this does not mean that the world is heading for a Malthusian disaster. Malthus assumed a limited set of resources and did not consider the effects of technological progress. The only solutions for population growth not involving plague, war or other mis- fortunes are birth control (which is often lacking in developing countries) and innovative technology that utilizes the scarce resources more efficient. The ruling class usually does not have a problem feeding and educating their off- spring, it is a typical problem for the poor masses. For technological progress however, fair and functioning institutions have to be in place.

Poverty Traps According to the Solow model, there are several equilibria of steady growth. It is possible to end up in an equilibrium with zero growth: a poverty trap. Sachs (Sachs, 2005) describes economic growth as a ladder of development, where countries can grow by climbing up the ladder one sport at a time. A poverty trap is comparable to not being on the ladder at all. For escaping a poverty trap injections of labor, capital and knowledge are needed. Developing countries usually lack those last two, which is why they stay in the trap. All funds available are consumed to stay alive and there is no money left to invest in schooling or infrastructure for a better future. Fragile economies that are still on a low level of development can easily be thrown back in to a poverty trap by adverse economic shocks (natural distasters, global recession, etc.) (Barrett, 2007). The law of diminishing returns suggests the same improvement has more impact in developing countries than in developed countries (Harford, 2006). The large fixed costs of institutions (Acemoglu et al., 2001) and the problem of imperfect information (Stiglitz, 2002a) make that without outside help, no significant growth is likely to happen in these countries.

The Visible Hand Where Adam Smith’s Invisible Hand will generate the optimal distribution and optimal prices of goods in a free market, this is not the case for all goods. According to Samuelson (Samuelson, 1954), an economic good has two fundamental attributes:

Rivalry - Does use of the good by one limit use of it by others? Excludability - Can others be excluded from usage of the good?

The use of knowlegde by one firm or individual does not limit the use of it by others. Excluding others to use knowledge is also quite difficult. Although intellectual property rights and patents come a long way, it is not possible to force someone to ”unlearn” knowlegde when he or she changes jobs. This

Msc Thesis, B. van Schaik (1294563) 16 Indonesia’s Education Policy characteristic of knowledge creates spillovers. Knowledge and the education system creating and maintaining it are public goods and the free market will fail to provide it optimally. Since education is a precondition to sustained growth, government intervention is needed.

Simply provisioning schools is not enough. In developing countries, demand for schools can depend (positively) on economic returns to education in local labor markets (Kingdon & Theopold, 2007). This is true for both girls and non-poor boys (since they are less likely to have to work to support the fam- ily). Unfortunately, for budget constrained households the negative income effect of enrollment of especially boys dominates. Improved economic incen- tives for education will make poor boys educational attainment worse, since with each additional year of schooling the sum of money not earned grows progressively. In countries were schools are not free, the negative income effect is enhanced by the school fees. Simply not enrolling and staying at home can save the family money.

Education is crucial for economic growth and governments need to provide it. This requires creation and implementation of education policies that ad- dress the right problems and this in turn requires functioning institutions and sufficient funds. Since these are often not available in developing countries, outside help is needed. International public institutions like the World Bank and IMF (and sometimes NGO’s) help by providing expertise and funds. In some cases bilateral help is channelled through these organizations too. In 1998 the World Bank launched its ”Knowledge for Development” program, based on the following framework consisting of four pillars to help countries articulate strategies for their transition to a knowledge economy:

• An economic and institutional regime that provides incentives for the efficient use of existing and new knowledge and the flourishing of en- trepreneurship. • An educated and skilled population that can create, share, and use knowledge well. • An efficient innovation system of firms, research centers, universities, think tanks, consultants, and other organizations that can tap into the growing stock of global knowledge, assimilate and adapt it to local needs, and create new technology. • Information and Communication Technologies (ICT) that can facilitate the effective communication, dissemination, and processing of informa- tion.

Msc Thesis, B. van Schaik (1294563) 17 Indonesia’s Education Policy

One of the most populous developing countries is Indonesia. Compared to other populous developing countries in Asia like India and China, it expe- riences relatively low economic growth. Its more developed neighbors in South-East Asia (Malaysia and Singapore) directly focus on research and university-business cooperations (Shapira, Youtie, Yogeesvaran, & Jaafar, 2006; Wong, Ho, & Singh, 2007) to stimulate growth. Indonesia is still in the phase of provisioning schools to all its children and setting a universal qual- ity standard. The rest of this chapter will introduce Indonesia, describe the structure of its government, its education system and the national education policy.

An Introduction to Indonesia

The South-East Asian country of Indonesia is a large (15th largest) and populous (4th) country. With over 235 million people and almost 2 million km2 land and water (CIA, 2008), it is both a huge potential market and a huge challenge to develop that market. Figure 2.1 shows a map of Indonesia. Indonesia is a developing country with 17% of its people offically living be-

Figure 2.1: Map of Indonesia (Source: CIA World Factbook) low the poverty line. According to the Indonesian government’s definition of poverty, a person lives below the poverty line if that person has less money than needed to afford 2100 calories a day (Economist, 2006). This is different than the more widely used PPP US 1$6 a day benchmark. The percentage

6The World Bank uses Purchasing Power Parity (PPP) exchange rates. The PPP of US$1 exchange rate indicates how many Rupiah are required in Indonesia to purchase the

Msc Thesis, B. van Schaik (1294563) 18 Indonesia’s Education Policy of people living below this 1$ a day line is 7,4% and this is comparable to other countries in the region. Unlike those comparable countries, Indonesia has 49% of its people living of between PPP US 1$ and US 2$ a day (Alatas, 2007). Indonesia therefore has an exceptionally large group of near poor people and is very sensitive to economic shocks.

The Indonesian government has recently stated Indonesia should be a knowl- edge based economy by 2025 (Ministry of Research and Technology, 2008) and its students should be smart and competitive by 2025 (Ministry of Na- tional Education, 2008). Since the ”Reformasi” that started with the fall of Suharto in 1998, much has changed in trade and education policies. Al- though the 1945 constitution obliges the state to spend at least 20% of the total budget on education, this has sofar not happened. In the 1980s this fig- ure sometimes reached 17%, but it was only 5% in 2006 (Kristiansen, Wahid, & Furuholt, 2006). For the elections in April 2009, several parties promised to actually allocate 20% of the budget to education (Jakarta Post, 2008b). After already some years of reform, it is interesting to see how Indonesia’s education policy works out in practice.

Indonesia’s Administrative System

Indonesia is a republic with a democratically, directly elected president and parliament. Figure 2.2 shows the structure of the Indonesian government. It practices the governmental model of Trias Politica. The executive branch consists of a cabinet with 3 coordinating ministers, 19 ministers, 9 state ministers, 5 non-ministerial posts and is headed by a president and vice- president. The cabinet is generally formed by a majority coalition of parties. The president can serve for a maximum of two five-year terms. The five non-ministerial posts are occupied by the attorney general, the cabinet sec- retary, the chief of the Indonesian police, the commander of the armed forces and the governor of the central bank (Bank Indonesia). The central bank is theoretically independent and its governor is elected by the parliament.

Legislative power is vested in both the president and the bicameral MPR (Majelis Permusyawaratan Rakyat - people’s consultative assembly). The MPR consists of the DPR (Dewan Perwakilan Rakyat - people’s representa- tive council) and the DPD (Dewan Perwakilan Daerah - regional representa- tive council). The DPR has 550 elected members proportionally representing multiple political parties. The DPD has four elected representatives from same amount of goods and services that US$1 would buy in the US. (Alatas, 2007)

Msc Thesis, B. van Schaik (1294563) 19 Indonesia’s Education Policy

Figure 2.2: Structure of Indonesian government each of the 33 provinces.

The judicial branch consists of the MA (Mahkamah Agung - supreme court), MK (Mahkamah Konstitusi - constitutional court) and the KY (Komisi Yud- isial - judicial commission). The MA is the court of final appeals and oversees all other courts. The MK makes the binding decision on the constitution- ality of laws and disputed election results. The KY elects the judges of the supreme court and its members are appointed by the president (with approval of the DPR). In terms of Lijphart’s classification of democracies (Lijphart, 1999), Indonesia is a relatively federal, multi-party administration and thus a consensus democracy. According to Lijphart, these types of democracies perform better, expecially for societies with deep ethnic, linguistic, religious, or ideological cleavages (as is the case in Indonesia).

Democracy in Indonesia Indonesia has only recently become a democ- racy. Since independence, mainly during the Soeharto era, it was at the opposite side of the spectrum. The parliament mainly consisted of the gov- ernment clergy party Golkar and the military (in which the police was incor- porated). The country was centrally guided and president Soeharto exploited Indonesia for his personal (and his family and cronies) wealth. The system of government was characterized by the Indonesian people as KKN (Korupsi, Kolusi, Nepotism). Due to this misgovernment, Indonesia was in bad shape when the Asia financial crisis hit in 1998. After massive uprising and riots Soeharto was forced to step down. Indonesia became a toy for the strict IMF inflation reduction policies (which is a story on its own, see (Stiglitz, 2002b; Chang, 2007)) and entered the era of ”Reformasi”. This reform is charac- terized by the shift to a consensus democracy and the decentralization of government tasks and services. The national government currently presides over foreign affairs, defense, justice, monetary policy and religion. The re- gions and municipalities are granted autonomy on all other tasks and services.

Indonesia is still a young democracy, which can be seen in the current elec- tion. On 9 April, 2009 the members of the DPR, DPD and DPRD (Dewan

Msc Thesis, B. van Schaik (1294563) 20 Indonesia’s Education Policy

Perwakilan Rakyat Daerah - people’s regional representative council) were elected. Campaigning not only included ”throwing mud”, but also exten- sive vote buying (about 50.000 Rupiah per vote). Candidates and parties presented no political programs but used photos and one-liners. Campaign posters included candidates in superman costume, pictures with Gandalf (the character from the ”Lord of the Rings” trilogy) and one candidate was pic- tured shaking hands with Obama and Osama at the same time. When the first results came out, quite some candidates were admitted to mental hospi- tals and one committed suicide (Jakarta Post, 2008a). Besides the fact that the loss of face is one of the worst things that can happen to the Javanese, these candidates lost huge sums of money. Most campaign funds came from heavy loans that candidates expected to be able to pay back generously once they secured their seat.

Government Budget The Indonesian government budget comes from two sources. The first is income from taxes. Taxing income requires an advanced government tax institution which Indonesia (like many developing countries) does not (yet) have7. Instead, the government’s main source of revenue is from taxing the exploitation of Indonesia’s abundant natural resources. Ta- ble 2.1 show the proportional transfer of tax income between the central and regional governments. The (large) municipalities have the same status as a region. Since the days of Soeharto, Indonesia has been heavily taxing natural resources. The government states that the income from Indonesia’s natural resources should be divided over all its citizens. The natural resources are mostly present in remote regions and the tax redistribution by population means most funds go to Java. Since the Reformasi (and under pressure to prevent unrest), the tax laws have been adapted several times so more tax money from natural resources stays in the regions where the resource is lo- cated. Table 2.1 shows the latest revision.

Since the first source is not sufficient to cover all costs of Indonesia’s policies, additional funds come from loans and gifts from other countries. Recently the Dutch government granted the Indonesian government 20 million USD for support of its School Operational Assistance scheme (Jakarta Post, 2008c). These grants are often channelled through the IMF or World Bank and often

7Indonesia is rapidly developing this. Citizens with an income over 15.84 million Rupiah per year are required to pay income tax and have a tax number called NPWP. To stimulate registration, several tax cuts and bonusses are temporary given to anyone who registers.

Msc Thesis, B. van Schaik (1294563) 21 Indonesia’s Education Policy

Source Central Province Region Neighbor regions Natural resources 20% 16% 32% 32% Oil and mining 84.5% 3.1% 6.2% 6.2% Natural gas 69.5% 6.1% 12.2% 12.2% Income tax 80% 8% 12% 0% Company tax 100% 0% 0% 0% Land/property tax 10% 16.2% 64.8% 0%

Table 2.1: Division of tax income come with strings attached.

Education in Indonesia

After a brief description of the structure of the Indonesian government, this sections describes the Indonesian education system and the national edu- cation policy. The last paragraph describes how Indonesia’s schools are fi- nanced.

The Education System The Indonesian school system, since the days of Soeharto, is based on the American school system. Six years of elementary school are followed by three years of junior high school, totaling nine years of compulsory education. After this, students choose a vocational school or senior high school, followed by university. There are several school standards: the national standard, national plus and international standard. The differ- ence is in the quality and amount of English used in class. Figure 2.3 shows the Indonesian school system.

SD - Sekolah Dasar After kindergarten (Taman Kanak-kanak) which starts at age four, children go to elementary school (SD) at age six. There are six levels and a national exam in the final year. Elementary school is compulsory, but some families delay enrolling their children to save costs. Besides delaying costs of schooling, children who do not go to elementary school yet are allowed to travel free on public transport. The curriculum at SD consists of Pelajaran Kewargaan Negara (PKN - Nationalistic lessons or state doctrine), Mathematics, IPS (social sciences), IPA (natural sciences), Indonesian, English, the local language8, Seni Budaya Ketrampilan (SBK -

8Indonesia has 737 living languages (Gordon, 2006). Schools are allowed to include the local language in their curriculum as an extra. In Java this is Javanese (Middle and East Java) or Sundanese (West Java)

Msc Thesis, B. van Schaik (1294563) 22 Indonesia’s Education Policy

Figure 2.3: The Indonesian School System local art), sports and religion.

SMP - Sekolah Menengah Pertama SMP (junior high school) follows directly after SD and is compulsory too. There are no (formal) alternative choices (like vocational schools) at this level, all children have to go to SMP. SMP has three years and ends with a national exam. The curriculum is basically the same as SD.

SMA - Sekolah Menengah Atas SMA (senior high school) prepares students for university. SMA is not compulsory and schools are allowed to charge fees. Like SMP there are three years. In the second year, students have to choose one of three specializations: IPA (natural sciences), IPS (so- cial sciences) or languages. All variants have PKN, Indonesian, English, a second foreign language (mostly Mandarin or Japanese), Teknik Informasi Komputer (ICT), mathematics, SKB, sports and religion in their curricu- lum. IPS has additional lessons sociology, economics, geography and history. IPA has additional lessons physics, chemistry, biology and mathematics. The language variant consists of some languages (often Mandarin, Japanese and German), anthropology and literature. The national exam only consists of three subjects: Mathematics, Indonesian and English. The government is currently implementing a new policy in which more subjects are included in the national exam (up to six). Besides this, the minimal grade for passing the exams has been increased from 40 to 55 points (on a scale of 0 to 100) in recent years.

Msc Thesis, B. van Schaik (1294563) 23 Indonesia’s Education Policy

SMK - Sekolah Menengah Kejurusan SMK’s are vocational schools, mostly telecommunications, administration or economics oriented. SMK has three levels, like SMA. A recent trend are the new SMK’s that teach both jobs skills and a SMA curriculum (at least enough for the national exam). Some students from these schools work a few years after graduation and use the money they earn to go to university. Because a growing number of students choose SMA and do not go to university, the government has started promoting SMK. A labor pool full of workers with only general knowledge and no vocational skills would not fit current demand for skilled workers.

Public vs. Private Indonesian schools (from kindergarten to university) are divided in public (negeri) and private (swasta) schools. The demand for schools is higher than the supply and the number of both types of schools has been growing rapidly in recent decades. The public schools are fully government owned, meaning the land, buildings and facilities are fully sub- sidized. School teachers and staff are civil servants, which gives them status, a relatively reasonable wage and a pension scheme. Like public schools, pri- vate schools receive an amount of money per student. However they do have to find their own sources of money for land, buildings, facilities and wages. Because of this, and contrary to most countries, public schools are generally of better quality. Their facilities are more complete and the teachers are of better quality. The elite schools are the oldest schools, mostly built before independence. Both public and private (often catholic) elite schools charge high fees to be able to provide high quality and status.

Non-formal Schools Besides the formal schools, Indonesia also has non- formal schools. It depends on the region if and how many of these schools are built. Some regions assume they have no education problems and refuse to support non-formal schools. Non-formal schools also come in two variants: PKBM (Pusat Kegiatan Belajar Masyarakat, privately run) and SKB (Sang- gar Kegiatan Belajar, public). The students here usually come from poor families who can not afford a formal school. A minority are students who did not pass exams at formal schools and were requested to change school (the non-formal schools never refuse students). The alternative SD is called ”paket A” (package A), SMP is ”paket B” and SMA is ”paket C”. There are no non-formal SMK’s or universities. The non-formal schools focus more on practice than on theory, but offer the full formal curriculum for the national exams. After paket A and B students can register at a formal SMP or SMA and paket C provides entrance to universities.

Msc Thesis, B. van Schaik (1294563) 24 Indonesia’s Education Policy

Religious Schools Besides the formal schools residing under the Ministry of Education, there are also religious schools. These reside under the Min- istry of Religious affairs. Although Indonesia officially recognizes 5 religions (Islam, Protestant church, Catholic church, Hinduism and Buddhism), the religious schools under the ministry of religious affairs are all Islamic schools. The regular curriculum is the same as the curriculum from the Ministry of Education. The difference is in the additional time devoted to studying Is- lam. Elementary school is named Madrasah Ibtidaiyah (MI), Junior high school is named Madrasah Tsanawiayah (MTs) and senior high school is Madrasah Aliyah (MA). There are also other religious schools, but these are formal private schools who reside under the Ministry of Education.

Accreditation and Standards Until a few years ago, public schools were all considered of best quality by default and were not accredited. The private schools could have any of the following four states: not-accredited, enlisted (terdaftar), acknowledged (diakui) and same-as-public (disamakan). Since last year, all formal schools (public and private) are regularly checked and accredited9. They can be A (highest), B, C or not (yet) accredited. The accreditation is done at municipality level for SD and SMP. SMA accredita- tion is handled at provincial level. The accreditation is done in two steps. First the school is sent some forms and they have to rate themselves on nine subjects:

1. Curriculum and lessons 2. Administration and management 3. Organization 4. Facilities and infrastructure 5. Professionality 6. Finance 7. Education and teachers 8. Role in society 9. School environment

These grades (ranging from 0 to 100) are gathered by the commission which then visits and also rates the school. The accreditation commission normally consists of pensioned off school heads. Not all schools are accredited yet. An overview of the accreditation of schools in Malang can be found in

9Which resulted in an overload of work for the commissions and many schools are not yet accredited or have their old accreditation expired.

Msc Thesis, B. van Schaik (1294563) 25 Indonesia’s Education Policy appendix B. For elementary schools (which are mostly public) 28% has an accreditation (A, B or C). Of all junior high schools (mostly private) about 24% is accredited and of all senior high schools (also mostly private) 78% is accredited. There are no accredited religious schools at senior high school level.

Organization of schools The Ministry of Education designs most educa- tion policy (the Ministry of Religion generally copies this) and is reponsible for education policy and the distribution of funds. The policy and funds trickle down from the ministry to the provinces education autorities and from there to the municipalities and regional autorities (who have the same legal status). The regional autorities and municipalities distribute the money to the schools. The Bantuan Operasional Sekolah (BOS - Operational school help) is an amount per student per year for SD and SMP students. The money is intended to finance the operational costs of the compulsory educa- tion program and provided to both public and private schools. The amount for SMP students is higher than for SD students and the amount per student is higher in the city than in the rural areas. Besides the BOS, public schools are completely financed by the government and are not allowed to charge additional fees. An exception is made for schools that offer the higher educa- tional standard (involving a partly English curriculum). The private schools have to find other sources of money (the BOS is not enough to completely finance a school) and private SMA schools do not receive any government funds at all. Non-formal schools are taken care of by the regional autority and municipality when it concerns permits and policy, but are dependent on the Ministry in Jakarta for funds. Each year they have to file a proposal and hope they are eligible for a one year block grant.

The Education Policy Indonesia is currently finalizing the implemen- tation of its nine-year compulsory free education program. The focus now is on improving equality of learning opportunities, improving the quality of research and improving management through more local autonomy and de- centralized education initiatives. The goal is that Indonesian learners must be smart and competitive by 2025 (Ministry of National Education, 2008). The vision of the Indonesian Departemen Pendidikan Nasional (Ministry of Education) is:

”Bringing national education system as a strong and respected social institution to empower all citizens of Indonesia to become enlightened human beings who are able to keep abreast the challenges of the time.”

Msc Thesis, B. van Schaik (1294563) 26 Indonesia’s Education Policy

Its mission:

1. Expand educational access and better quality of education 2. Accommodate rights and needs of children 3. Improve accountability and professionalism of schools 4. Community participation based on decentralization.

Although the published education policy is ridden with politics and ambi- guities, the accessibility and quality of education for all citizen of Indonesia clearly emerge as the main goals.

Msc Thesis, B. van Schaik (1294563) 27 3. Research Design, Method and Data Sources

The first section of this chapter proposes a policy model based on the theory of chapter 2. From this model the research hypothesis is derived in the section ”Hypothesis Formulation”. Section 2 describes the research methods used and how and where the data is collected. The last section describes how the factors of influence from the policy model can be operationalized into measurable variables.

A Policy Model for Economic Growth

Based on the causal relations mentioned in the theory of chapter 2, we can construct a policy model. First of all there is the Solow model (Solow, 1956) stating that growth is driven by capital (K) and population (labor force L). Where innovation (A) is largely exogenous in the original model, the aug- mented Solow model (Mankiw et al., 1992) internalizes it with the factor human capital. We now have three factors determining growth. Two of those, population and (physical) capital are influenced by respectively popu- lation growth and savings. Both these factors are not influenced directly1 by education policy and are less relevant here. Consequently, they are treated as exogenous for this particular model.

Human capital is determined by cognitive skills in two ways. Firstly, a higher level of cognitive skills increases innovation which increases produc- tivity through technological change (Romer, 1990; Hanushek, 2005; Jamison et al., 2007). Secondly, a higher level of cognitive skills increases the ab- sorption capability for new technology (Bils & Klenow, 2000; Pavitt, 2001;

1There is some preliminary evidence (Glewwe, 2002) that links increased education of women to lower fertility rates. This would be very relevant for macro-level models incorporating all factors of growth

28 Indonesia’s Education Policy

Krueger & Lindahl, 2001; Jamison et al., 2007) which also increases the pro- ductivity of the labor force. As described in chapter 2, cognitive skills are determined by both the quality of education (Glewwe, 2002; Jamison et al., 2007) and the accessibility of education (Duflo, 2001; Hanushek, 2005). If we combine the causalities described here, this results in the model shown in figure 3.1. As with any model, this is a simplification of reality. The less

Figure 3.1: A policy model for economic growth relevant relations are left out for reasons of tractability. Notice that instead of quantity of education, the term accessibility is chosen. This better repre- sents reality in Indonesia where the presence of a school does not neccesarily mean it is acccessible to everybody. The chain of causality in this model suggests that more and better education causes more growth. There are some studies (Bils & Klenow, 2000; Krueger & Lindahl, 2001) that suggest there also is a reverse causality and more growth (or even the anticipation of more growth) increases education efforts. While this probably is true, the model used here assumes the causal relation is mostly in the direction from education to growth. The best evidence for this is that immigrants in the United States that received education in countries that have higher educa- tion scores also have significantly higher wages in the US (Hanushek, 2005). The model is interpreted on a national level, since this is where the economic boundaries of the system are (beyond which different policies are effective). Besides increasing innovation and absorption capability, investing in cogni- tive skills most probably also results in externalities like reduced crime rates and reduced social costs (welfare). These externalities are not part of this model.

A last note on the specific education system under analysis in this thesis

Msc Thesis, B. van Schaik (1294563) 29 Indonesia’s Education Policy is needed. The education system consists of several sequential layers ending with higher education. The last step before higher education is senior high school. As the data in figure 3.2 (more details in appendix B) show, only a lit-

Figure 3.2: Distribution of education (source: BPS) tle more than 4% of Indonesia’s citizens makes it through any form of higher education (in an average sized city like Malang this is about 11%, see table B.1). Indonesia has a fairly large number of universities and polytecnics, but since this is the last step in the education proces it has yet received very little attention. Universities in Indonesia range from international top 500 universities like Universitas Indonesia (Jakarta), Institut Teknologi Bandung and Universitas Gadjah Mada (Yogyakarta) to small backrooms were degrees can be bought at affordable prices. Elementary school enrollment increases cognitive skills and income (Duflo, 2001) and secondary and post-secondary education matters even more (Krueger & Lindahl, 2001). Indonesians who want to work in a luxury mall instead of in a shop at the corner of the street are often required to have at least completed senior high school. Consider- ing the small effects and highly disorganized nature of higher education in Indonesia, it is left out of this analysis.

Hypothesis Formulation

Indonesia has a history full of inequality for the different groups and regions in its society. Java oriented politics, elite-rule and corruption have created different realities for poor and non-poor, farmers and city dwellers, and Ja- vanese and outer islanders (Kingsbury, 2002; Robertson-Snape, 1999). In a culture where appearances are sometimes deemed more important than reality, policies often consists of good intentions that are never fully imple- mented (Bjork, 2004). The goals of the Indonesian education policy are to

Msc Thesis, B. van Schaik (1294563) 30 Indonesia’s Education Policy provide quality education that is accessible to all Indonesians. This should increase the human capital of Indonesia and ultimately result in higher eco- nomic growth. As the research question indicates, it is questionnable that quality and accessibility of schools is actually equal for all Indonesians. In line with the policy model from the previous section, we can say that, as- suming equal ratios for capital and population, economic growth outcomes in the various regions of Indonesia must be similar if the quality of schools is similar and these schools are equally accessible to all Indonesians. This thesis attempts to analyze the impact of the education policy by testing the following hypothesis:

The accessibility and quality of Indonesian schools are unequally dis- tributed causing disparate regional growth outcomes

Testing this hypothesis in a single step will make the analysis too complex. It is therefore split in three sub-questions that are answered subsequently:

• How can quality and accessibility of Indonesian schools be measured?

• How are the schools distributed throughout the country?

• How does this distribution relate to economic growth outcomes?

The remaining sections of this chapter describe the the research methods and data sources and the operationalization of the factors to variables.

Research Method and Data Source

The different nature of the three sub-questions justify a pluralistic approach to testing the hypothesis. The different aspects of the questions are detailed in this section, describing a different research method for each question.

How can quality and accessibility of Indonesian schools be mea- sured? According to the policy model at the beginning of this chapter, the factors quality and accessibility of schools determine the cognitive skills of students. Quality and accessibility are both abstract concepts and difficult to measure directly. They need to be operationalized first. This is done by carefully selecting (based on the theory of chapter 2) several variables as proxies for quality and accessibility. This selection is described in detail in the next and last section of this chapter. We can then subject these variables to a statistical analysis. The variables for quality and those for accessibility

Msc Thesis, B. van Schaik (1294563) 31 Indonesia’s Education Policy should logically group together and show a relation with those for cognitive skills. The first is tested with a principal component analysis and the sec- ond by showing a relation between relevant components of the factor analysis.

Statistical analysis can prove significant correlation between variables, but the descriptive nature of the method does not by itself provide insight in the data. Correlation does not automatically mean a causal relation. For this, we need to confirm the independent variable is ahead in time of the depen- dent variable and there are no other variables that explain the correlation better. An experiment where schools are randomly placed in a treatment and control group would be the best option. Large enough samples would even out differences between groups. The proxies for the treatment and control groups could be varied and student achievements measured. The resulting data set would be well suited for statistical analysis. But a randomized trial of this kind would be wrong for ethical reasons and impracticle because of the large overhead required to garantee randomness in a corruption prone environment. Instead, a quasi-experimental approach is chosen that exploits the ”natural” variation in school types in Indonesia.

The division of schools in public and private and the corresponding difference in quality2 provides the natural variation in quality needed. Several experts outside (Svensson & Reinikka, 2005; Bjork, 2004) and inside (sources A,C,E and F) Indonesia warn that the data from the national and statistical agen- cies often is ”repaired”. To ensured credibility and accuracy, the data is therefore gathered at schools directly. The researcher (in three out of four schools personally) distributed anonymous questionnaires to the students of at least three classes per school. This thesis focuses on primary and sec- ondary education, but the questionnaires are only distributed at secondary level schools. The reason is that possible misunderstanding of the questions by students at primary schools would decrease the reliability of the data.

Although Indonesia enjoys free press and it is allowed to openly criticize institutions, this is not always without the risk of repercussions. For this reason, wherever I refer to data from an interview I refer to the source by a letter (for instance: ”source A says ...”). A coded list of these sources is made available to the thesis committee (see appendix F) and to anyone with a genuine research interest upon request. To gain access to schools two

2As described in chapter 2, public schools in Indonesia are on average of better quality than private schools. This is opposite to most other countries where private schools provide better quality education.

Msc Thesis, B. van Schaik (1294563) 32 Indonesia’s Education Policy reference letters from Delft University of Technology and a reference letter from the head of the education department (Diknas) of the city of Malang (where the schools are located) were used. The references letters are included as appendix E.

How are the schools distributed throughout the country? Given the sheer size of Indonesia, it is impracticle to gather information on schools in all regions and catalog them according to quality and accessibility. Alter- natively, a case study of several schools is used to construct stereotypes of schools. Based on expert interviews, literature and media reports the distri- bution of these stereotypes over Indonesia is determined. The classification of schools in stereotypes is based on the differences in quality and accessi- bility and further strengthened by observation at the schools and interviews with school heads, staff and teachers. To reduce the risk of subjectivity, the persons interviewed at schools are interviewed independently and, where possible, information is verified by outside experts.

Indonesia has a variety of schools ranging from non-formal to elite and from public to private. A strategic selection of those is used for this case study. The case study design is based on the methods developed by Yin (Yin, 2003). Limitation of the number of schools allows for an in-depth contextual anal- ysis of the school characteristics. The downside is that the external validity of the stereotypes is low. The distribution of the stereotypes over Indonesia is determined by interviewing education experts with field experience, uni- versity students from remote regions and backed up by literature and media reports.

The schools visited to conduct the interviews were all located in Malang. The East Javanese city of Malang was chosen for its wide selection of schools. All types are represented here. Besides this, Malang acts as an education hub for university students from both the province East Java and the eastern half of Indonesia (the islands of Kalimantan, Sulawesi, Nusa Tenggara Timur, Maluku and Papua). These students, along with education experts from local schools and universities, were used as interviewees. Indonesia is not (yet) an open society and it is quite common to hide (supposedly) negative information. This is culturally acceptable. Social conduct and even the lan- guage is geared toward ”saving face” and maintaining status at (almost) all costs. This is especially the case for the Javanese, who refer to this concept as ”halus”3 (meaning ”soft”). To overcome this problem the interviews are

3See (Kingsbury, 2002) for an explanation of this cultural phenomenon

Msc Thesis, B. van Schaik (1294563) 33 Indonesia’s Education Policy all personally conducted by the researcher in Indonesian. In cases where the interviewee used an extensive amount of Javanese, this is translated by a native speaker4.

How does this distribution relate to economic growth outcomes? Although there is data on regional economic growth available at the national and regional Indonesian statistical agencies (BPS - Biro Pusat Statistik), this data is old and obtaining it in useable form can be quite the challenge. Instead, more readily available statistics on the poverty level of each region are used. The level of poverty reduction is inversely related to the level of income growth and provides a good proxy. Since the data is from BPS and runs the risk of being ”repaired”, it is verified by literature studies, expert interviews and media reports.

To garantee the quality of the information from the interviews, the same precautions were taken as mentioned in the previous paragraph. On some occasions there was no Javanese translator present. This is due to the simple fact that the entire conversation was in Indonesian and expert interviewees were mostly fluent in both Indonesian and English.

Factors, Proxies and Variables

The quality and accessibility determine the cognitive skills of students. But these are abstract factors and hard to measure. Several variables are selected as proxies for quality and accessibility of schools. This selection is based on both the theory from chapter 2 and the expected difference between school types based on expert opinion. These variables are measured with a ques- tionnaire (appendix C) and subjected to a statistical analysis in chapter 4.

Quality Glewwe (Glewwe, 2002) describes variables used for measuring quality in several studies. These include some measure of the characteristics of the school building, the presence of writing materials and books. The characteristics are the same for the whole school and not measured by a stu- dent questionnaire. The variable facilities is used to cover these aspects in this study and determined through observation on site. Another variable is teacher training and this is also mentioned by Hanushek (Hanushek, 2005), along with teacher salary and teacher motivation. These are difficult to mea- sure directly, but one of the differences between public and private schools 4The researcher does not speak Javanese. The translator was present at the interviews and has a degree in both Indonesian and English

Msc Thesis, B. van Schaik (1294563) 34 Indonesia’s Education Policy is the teacher salary. The public schools used for the questionnaire are elite public schools and they all require their teachers to have a Master degree instead of a Bachelor degree. The school type captures this. The litera- ture also mentiones extra teaching time as relevant (although not strongly relevant). Some Indonesian schools offer extra lessons at the school itself or urge their students to take extra lessons at private institutes. The vari- able extra lessons represents this. The Indonesian government distinguishes school quality through an accreditation system. This is used as the variable accreditation.

Accessibility The distance to school can matter for accessibilty (Talen, 2001; Knight et al., 2008), but in an environment with a high school density like Malang this might not show in the data. The factor is represented by the variables travel time, transport costs and transport modality. Deininger shows that school costs matter significantly for enrollment (Deininger, 2003). For this reason, the students ability to pay the costs, daily allowance (used for lunch and joining classmates in several other activities) and the costs of extra lessons are selected as variables. Since Indonesian schools are known to have an active student selection policy, this has to be accounted for too. The variables how difficult entrance to the school was and if students ever changed school represent this. The better quality schools often refuse to accept student above a certain age, so age is a variable too. However if students at a young age don’t enter school, they are not likely to enter later either. The number of older students might therefore be limited even in low quality schools.

Cognitive Skills If we are to determine which variables can be used as proxies for quality and accessibility, some measure is needed to verify this. We know that quality and accessibility of schools influences student cognitive skills. This means that the variables for quality and accessibility are likely to covariate and show significant differences between public (elite) and private schools. There also must be a relation between variables for quality and accessibility and student cognitive skills. This means that variables for this have to be measured too. Raven’s tests would be a good option, but is costly in terms of student time and schools are less likely to cooperate. Instead, the student average grade and the number of dropouts are used. Schools are not exactly proud to report dropouts, but students can be asked if their friends dropped out of school and this allows estimation of the number of dropouts.

Msc Thesis, B. van Schaik (1294563) 35 4. A Field Study into Indonesian Education

This chapter consists of two main parts. The first part contains the analysis of the field data. It answers the subquestions and with it the research hy- pothesis. In the second part, the validity and implications of the analysis are discussed and placed in the context of current developments in Indonesia.

Analysis

In the first three sections of the analysis, the data gathered to answer the questions posed in the previous chapters is presented. The first section de- termines which variables can be used to describe the factors quality and accessibility of Indonesian schools. This is done through statistical analysis of empirical data. In the next section, descriptions of stereotypical schools are provided and these are used to describe the distribution of schooling over Indonesia. After this, the distribution of wealth and poverty over the regions of Indonesia is presented. The results of these three sections are then used to provide an answer to the research question.

Statistical Analysis of Empirical School Data

The quality and accessibility of Indonesian schools are measured through 15 variables. These variables serve as proxies and are based on theory and ex- pert opinion (see chapter 3). Of these variables, 13 are suitable for use in a questionnaire. The variable accreditation is determined externally and not included in the questionnaire. The (school) facilities are also difficult to rate (compared to other schools) for the students, so this variable is not included either. Both these variables are assessed based on other sources. About 400

36 Indonesia’s Education Policy questionnaires were distributed to students of four secondary schools. These were two junior and two senior high schools and for both an average and an elite school is selected. At each school at least three classes were selected to prevent possible bias by specific group dynamics of one class.

Of the 400 questionnaires, 375 are valid and used for statistical analysis. The data from the questionnaires is entered in SPSS1. The 13 (used) variables from the questionnaire are school, student age, travel time, transport costs, extra lessons, changed school, grade, entrance difficult, daily allowance, costs lessons, ability to pay, dropout and mode of transport (for detailed explana- tions see appendix D). These variables are screened first using descriptive statistics. This is done to check if there are enough differences between the schools to provide any explanatory value. A detailed summary of the data can be found in appendix E. All variables showed possibly interesting dif- ferences between schools, except for age. As figure 4.1 shows, the ages in the classes of the schools are about the same. The non-elite schools (SMA Taman Madya and SMP Kalam Kudus) have some outliers, but these are not sufficient for a relevant difference.

Figure 4.1: Age distribution per class, grouped by school

The remaining 12 variables are merely observed variables. There might also be unobserved variables consisting of (partial) combinations of observed variables. To explore this possibility, the coherence of the variables and to examine how much of the variation in the data is explained by the variables, a Principal Component Analysis (PCA) is used (details available in appendix

1SPSS: Statistical Package for the Social Sciences, version 17.0

Msc Thesis, B. van Schaik (1294563) 37 Indonesia’s Education Policy

D). This mathematical procedure transforms the 12 variables into fewer variables (the principal components) that explain a part of the variation. The first component explains the highest percentage, the second the next highest percentage, and so on. PCA of the 12 variables from the questionnaire results in five principal components. During the procedure, the factor load of each variable on each component is calculated. In some cases, this might be difficult to interpret. To facilitate a better interpretation of the components, the matrix can be rotated so that the variables better cluster around the axes of the principal components and the factor loads are computed again. The result of this for the 12 questionnaire variables is shown in figure 4.2 The

Figure 4.2: Rotated component matrix

five principal components together explain 62% of the variation in the data. When each variable is coupled to a component on which it has a high load, this results in the following grouping:

1. Transport (transport costs, mode of transport, travel time) 2. Achievements (entrance difficult, grade, dropout) 3. Money (allowance, able to pay costs)

Msc Thesis, B. van Schaik (1294563) 38 Indonesia’s Education Policy

4. School type (changed school, school) 5. Lessons (Extra lessons, costs lessons) Each component is given a name that fits with the type of variables in it. To examine if the there are relations between these components, they are plotted in a five by five scatterplot matrix (appendix D). As figure 4.3 shows, there is a relation between the components ”Achievements” and ”School type”. The type of school is determined at the opening and the achievements can

Figure 4.3: Scatter plot of Achievements and School type only be measured after that. Since the other three principal components show no clear relation with the component ”Achievements”, we can speak of a causal relation where the type of school determines the achievements of the students. With this causality in mind, the next section describes the stereotypical schools of Indonesia.

We now know that there are differences in student achievements depend- ing on the type of school. The question remains what variables influence the quality and accessibility of the schools. This can be determined by examining the questionnaire data again and this time specifically look at the relation between the variables we expect to relate with quality and accessibility. Not all variables are determined with the questionnaire. School wide variables (facilities and accreditation) are determined from municipal education data and interviews with school staff and teachers.

Table 4.1 provides an overview of some of the data gathered at the school visits (for an explanation of how the values were determined see appendix C). SMA Negeri 5 and SMP Negeri 5 are considered elite schools and have superb facilities. The worst rating for facilities is none, which is given to

Msc Thesis, B. van Schaik (1294563) 39 Indonesia’s Education Policy Dropout 54% 55% 10% 32% Avg. grade 75 62 82 72 Fam. Size 5,14 5,08 2,90 3,03 Facilities superb average superb good average none good none Allow. rp 7500 rp 7000 rp 7000 rp 6500 rp 0 rp 0 SPP rp 200.000 rp 213.000 rp 100.000 rp 200.000 - rp 20.000 rp 0 rp 0 Ext. Costs rp 216.000 rp 222.000 rp 210.000 rp 160.000 rp 0 rp 0 Entr. fee rp 9.000.000 rp 3.000.000 - rp 1.500.000 - rp 0 rp 0 rp 0 Ext. Lessons 52% 64% 40% 25% 0% 0% Overview of school data Entr. test yes no yes yes yes no no no Int. lessons 31% 95% 92% 17% 0% 0% Table 4.1: Students 1000 1000 1000 141 248 147 400 Tr. costs rp 4100 rp 3800 rp 3500 rp 3400 Accr. A A A A A - - - Tr. time 22 19 17 18 School SMA Negeri 5 SMA Taman Madya SMP Negeri 5 SMP Kalam Kudus SD Negeri SD Islam SKB (Negeri) PKBM School SMA Negeri 5 SMA Taman Madya SMP Negeri 5 SMP Kalam Kudus SD Negeri SD Islam SKB (Negeri) PKBM

Msc Thesis, B. van Schaik (1294563) 40 Indonesia’s Education Policy the private non-formal schools (PKBM) and a private elementary school (SD Islam) in a slum neighborhood. If good achievements are caused by school type and a quality school is considered a school with good performing stu- dents, the school facilities are an important factor according to the data in the table. The same reasoning holds for the school accreditation, also shown in table 4.1. The best schools are rewarded an A (highest) status by the accreditation commission. The worst schools are not awarded a status or the commission didn’t even bother to visit. Two other variables (although they do not vary with school type) are worth mentioning here. The average family size for students at senior high school is 2 persons higher (compared to junior high school) and a senior high school student is 20 to 40 percent more likely to have a friend that dropped out of school. This is due to the birth wave of the late 1980s discussed later and the non-compulsory nature of senior high school.

Figure 4.4 shows the average grades per school type. Although one might

Figure 4.4: Average grade per school think that a better quality school results in better grades, the reverse is also true. The aggregate of many students with better grades will increase the average quality of the school. Students perform better in a group where standards are higher (due to the social dynamics of peer pressure and com- petition). Levene’s test shows that the variance between the elite school and non-elite school samples is not equal. This mean no T-test can be performeed to prove a significant difference. However a Wilcoxon-Mann-Whitney test does show a significant difference in average grades between elite and non- elite for both junior and senior high schools. For facilities and accreditation

Msc Thesis, B. van Schaik (1294563) 41 Indonesia’s Education Policy the sample size is too small too prove a significant difference with a statistical test, but the differences are obvious. To summarize, the quality of a school is determined by:

• Facilities • Average grades • Accreditation

The most obvious proxy for school accessibility is the student selection pro- cess. There are two sorts of entrance: students can enroll at the school at the beginning of a level (SD, SMP, SMA) or they can change schools during a level. Figure 4.5 shows how difficult students rated it to enter their current schools and figure 4.6 shows the number of students that changed schools. The first figure clearly shows that it is percieved more difficult to enter elite schools. The second figure suggests it is easier to change from an elite school to a non-elite school than the other way around. Experts confirm (sources A, E and G) that the elite schools have about a factor 10 more applications than places. The elite schools generally select the students with the best cognitive abilities and the most money. The perceived difficulty to enter a

Figure 4.5: Perceived difficulty to Figure 4.6: Students that changed enter school school school also is not suitable for a T-test (the condition of equal variances is not met), but here a Wilcoxon-Mann-Whitney test again shows the difference between elite and non-elite schools is significant. The number of students that changed schools also significantly differs between the two school types according to a chi-square test. Both variables differ significantly for junior and senior high schools and the selection process is an important proxy for

Msc Thesis, B. van Schaik (1294563) 42 Indonesia’s Education Policy school accessibility.

The role of money is also confirmed by the questionnaire data. Figure 4.7 shows how the students at the different schools rated their ability to pay all the school related costs. Students at the elite schools mostly report that they have no trouble paying. The categories ”normal” and ”difficult” are bigger at the non-elite schools. Some students reported they are not able to pay the costs of schooling at all. This only occures at compulsory junior high schools. Most of these provide dispensation for (a limited number of) good performing but poor students. According to a Wilcoxon-Mann-Whitney test, these differences are significant.

Figure 4.7: Ability to pay school Figure 4.8: Daily allowance per costs school

These poor students do have a hard time though. As explained before, sta- tus and image are of utmost importance in Indonesia. In most cases the better schools also offer better quality and higher priced food in their cafe- terias. Students from the richer schools, like at other schools, like going out together after school hours. For richer students, this means hanging out at malls, going to the cinema and other activities that generally cost money. A poor student at an elite school is not able to join these activities and is socially excluded from the group. Figure 4.8 shows the allowance per school type. Although all schools have students with a daily allowance of 10.000 Rupiah or more, the non-elite schools have larger groups of students with less than 5.000 Rupiah per day. The differences in allowance are significant for junior high schools, but not for senior high school. This probably is due to the large ”lower than 5000 rupiah” and ”higher than 10.000 rupiah”

Msc Thesis, B. van Schaik (1294563) 43 Indonesia’s Education Policy categories, in retrospect these catch all categories should have been further from the mean by inserting more categories. Summarizing, we can say that accessibility depends on: • Selection process • Ability to pay the costs • Allowance From the other variables, extra lessons and the costs thereof differ signif- icantly at junior high school level but not at senior high school2. These are grouped as principal component number five, show no relation with other components and only explain a small part of the data. The difference in number of students that have a friend who dropped out of school is signifi- cant at junior high school, but not at senior high school. Because senior high school is not compulsory the chance of having a friend who not even started senior high school is higher. The question on dropouts allows ambiguous in- terpretation by the students on this matter and is therefore not used further as a proxy.

School Stereotypes in Indonesia

As the statistical analysis shows, there are clear differences between the school types. These different school types are the unit of comparison for the comparative analysis in the next section. This section paints general pictures of the four stereotypical schools found in Indonesia. Of course ev- ery school is unique and should be judged on its merits and not based on a stereotype. The stereotypes here are ”virtual” schools and only provided to enable a better comparison. However the differences between schools are very sharp when applying for a job in Indonesia. A diploma from an elite school gives a higher chance to get a good job. Several sources (A, C, E and F) confirm this. The lists of new students at the elite universities show mostly students from favorite high schools and with a diploma from a elite school you are more likely to get a job at a governmental institution or large (multi)national firm. When applying for a job as civil servant, there is a min- imum grade average needed. This minimum is lower for students from public schools than for those from private schools. The following school stereotypes are based on observation and interviews, detailed descriptions of the actual schools visited can be found in appendix A.

2Actually the Chi-square test could not be used for extra lessons at senior high school level because one of the categories had a value lower than five. In hindsight, a slightly larger sample size might have prevented this.

Msc Thesis, B. van Schaik (1294563) 44 Indonesia’s Education Policy

The Elite School The elite school is quite old and started of with good facilities left by the former colonial ruler. It is convienently located in better neighborhood near the center of the city. The building has just received a new layer of paint and looks great as a backdrop to the spacious and well maintained school garden. When entering the school the sounds of students practicing traditional gamelan music can be heard. At lunch break, students gather in the mini food court at the edge of the garden. They all wear identical spick and span uniforms. The students were selected for their intelligence and money and can easily afford the expensive uniforms. As normal for their age, they like to differ a little from each other. Status is increased by popular brand shoes, bags and vests (which can be worn over your uniform when it is ”cold”). Most students arrive by motorcycle and the newest models are off course deemed most attractive. In the teacher room, the teachers plan their next study trip to Singapore. They visit their sister school over there at least once a year. This is done together with the teachers of other elite schools. In the afternoon the accreditation commission visits. It is headed by the former head of another elite school. The commission drops in at the teacher room and they discuss their memories of the time they took English lessons together at EF, an expat lead language training institute.

The Public School It’s early morning and the air still feels fresh outside. Teacher and students arrive by motorcycle and angkot (public transport) and rush in the spacious and cool building. The teachers are all civil servants, which can be seen by their uniforms and red license plates. The school staff is busy processing the new books they just received from the Ministry of Education. Some parents drive by to pay the monthly fee. Since teachers are fully paid by the government, these funds are used to upgrade the facility and pay for extracurricular activities. At half past one the teachers are off to the farewell party of a collegue who just turned 55. Altough he receives a nice pension, he will open his own shop next week to earn some extra money. In an hour the extra lessons for the students will start and some of the (non civil-servant) young teachers are already arriving.

The Private School The school head looks a bit stressed today. She is worrying how to pay the teachers salaries this month. The building needed some repairs and the school fees barely cover the maintenance costs and teacher salaries. The Operational School Costs provided per student by the government haven’t increased in years. They used to be sufficient, but the costs increased a lot these last few years. If the teachers don’t receive enough,

Msc Thesis, B. van Schaik (1294563) 45 Indonesia’s Education Policy

Figure 4.9: Private SD Figure 4.10: State SD the will report sick again and try to earn some extra money elsewhere. The school head eventually decides to send the parents a letter again and bill them for the repairs of the building. Meanwhile the students enjoy their lunch break in front of the school. The guard makes sure they don’t leave the fenced premises. Some people with food carts arrive and sell food to the students. They are here everyday. The students all wear uniforms, but there are some size and color differences. These are the students that just transferred in from other schools.

The Non-Formal School It’s early in the evening and the students arrrive at the school. Although most non-formal schools rent classrooms, this one owns a building. Fortunately it is not raining and all rooms can be used. All students wear different clothes, a strange view for an Indonesian school. But their money is better spent on buying food and the school doesn’t mind. Now and then a baby cries, one of the students brought it because she couldn’t find a babysitter tonight. In the back the head of the foundation that runs the schools is busy calling and discussing. The students sometimes are sent to another place to learn ”life skills”. Last night, one of the female students was raped there and now the parents demand money from the foundation. The head really wants to help, but giving money means he will have to cancel classes for a while.

Comparison Table 4.2 shows a comparison of the stereotypical schools based on the factors determining quality and accessibility as determined in the previous section. Allthough the average grade is higher at non-formal schools than at private schools, this is because the exams at non-formal schools are easier (they are not the same as the national exams for formal schools). There is a clear ranking from elite (highest) to non-formal (lowest).

Msc Thesis, B. van Schaik (1294563) 46 Indonesia’s Education Policy

Factor Elite Public Private Non-Formal Facilities superb good average none Average grades above 7 around 7 around 6 around 7 Accreditation A A A,B or C none Selection Process elite strict open none Able to pay costs 99% 90% 80% 0% Allowance high average average none

Table 4.2: Comparison of school stereotypes

Age Public Private Religious 6-12 19% 67% 14% 12-15 42% 55% 3% 15-18 31% 65% 4% average 31% 62% 7%

Table 4.3: Malang students per school type

The religious schools can be considered a fifth stereotype, but because of their similarities to the private schools they are not mentioned separately.

Distribution of Schools and Growth

We know that quality education delivers skilled workers and drives inno- vation, which in turn drives economic growth. We also know that there are different types of schools with a different quality and accessibility. This section describes how these schools are distributed and how this relates to economic growth. The large and medium sized cities of Indonesia are often founded in (or even before) the colonial era. Within these cities, all 4 types of schools can be found. As table 4.3 shows, the largest part of the students (62%) is enrolled at private schools. There is also a number of students not enrolled at all, but this number is relatively low for the cities and not shown in this table. Table 4.4 shows the percentage of students per age group in Malang. Note that about a third of the students leave the education system after SD. It seems like most students who enter SMP also go to SMA or SMK afterwards, but this is not the case. Table 4.5 shows the age distribution of Malang. The economic boom of the 1980s caused a birth wave that faded out over the 1990s. The last part of the wave is now of SMA age and the number of students in SMA is about 50% higher than the number of students in SMP. Looking at table 4.4 again, we now have to conclude that after SMP about

Msc Thesis, B. van Schaik (1294563) 47 Indonesia’s Education Policy

Age # Students % 6-12 67.858 42% 12-15 46.131 29% 15-18 46.174 29% total 160.163

Table 4.4: Malang students per age group

Age # Population 0-4 59962 5-9 58763 10-14 61736 15-19 91409 20-24 120448 25-29 77345

Table 4.5: Malang people per age group (2005) a third of the students leave the education system again. The only positive note here is that in Malang almost all students at least complete elementary school. An average city like Malang consists of mostly private schools and quite some public schools. There are about seven elite schools (mostly public or private Catholic schools) at each level and a similar amount of non-formal schools. About 7% are religious schools on average but relatively most (14%) at SD level.

As Harford argues (Harford, 2008), cities tend to be efficient in providing facilities (which is their raison d’ˆetre)and consequently rural areas have less facilities. For instance extra lessons are rarely available both inside and out- side rural schools (source A and H). Sometimes students who have trouble studying in the cities are sent to schools in the rural area outside the city, where schools are said to be easier (source H). Two sources (A and C) told that in some rural areas, girls are kept home after elementary school because of conservative religious reasons (”Women should stay at home and have no need for an education”)3. Parents in these areas are not always supporting the formal education of their offspring (”What do you need an education

3The Indonesian president recently signed a new law forbidding discrimination based on race and religion (but not based on gender). However the Indonesian law on marriage from 1974 still forbids marriages between religions. It does have one thing in common for all: Men are responsible for the family income and women are responsible for the household and raising children.

Msc Thesis, B. van Schaik (1294563) 48 Indonesia’s Education Policy for if you are going to be a farmer for the rest of your life?”). These are the areas where the negative income effect comes in to play; on the short term the family is better off if children drop out of school and find a job. Experts (source A and E) say each desa (village) now has at least an ele- mentary school. Most also have an SMP, but not all. Since SD and SMP are compulsory education, this means that most of the rural areas have the potential to comply with the law on compulsory education, but not all. The types of schools in the villages are usually public schools. In areas with a lot of children and a shortage of schools, this gap is sometimes filled by private schools. There are no elite schools in rural areas, there is just not enough money around to support one. There are rarely non-formal schools around either. Children from troubled families are send to a ”pondok pesantren” (Islamic boarding school under the Ministry of Religion), family living in a city or not send to school at all.

A recent television campaign shows images of school complexes (SD and SMP) and water and electricity facilities being constructed in remote regions in Nusa Tenggara Timur (NTT), Papua and Sulawesi. Experts (source A and D) confirm these programs work in providing education in places it was previously unavailable. These regions however do not yet have the school density that Java has. In Papua, there is an elementary school for about ev- ery three kampungs (village, comparable to a desa in Java). Travel to school can be difficult due to a lack of public transportation. A one hour walk is not uncommon (source D). The quality of the schools in remote regions is generally low (sources A, D and I). Good quality schools are only avail- able in the cities in these remote regions, but they do not have the facilities (buildings, materials) and opportunities (international cooperation, teacher training) that the elite schools of the cities in Java have (sources A and I). Because almost everything has to be imported from Java, prices are higher. Some schools in Java sent their old books to schools in the remote regions when they receive newer ones. Even teachers are regularly recruited from Java, since the remote regions also suffer from a qualified teacher shortage (source B). Compared to the rural areas in and around Java, the schools in the remote regions of Indonesia are of less quality and less accessible. Remote regions are behind in provisioning schools to the public. There are rarely elite schools or non-formal schools. The number of public schools is increasing, but not as much and as fast as is needed. Sometimes rich firms that extract natural resources prevent social unrest by funding local private schools. The remote regions are mainly located in the Eastern parts of Indonesia where the percentage of Muslims is low. Consequently, ”pondok pesantren” are rarely found there.

Msc Thesis, B. van Schaik (1294563) 49 Indonesia’s Education Policy

After analyzing the distribution of schools over Indonesia, a fourth factor that influences accessibility becomes noticable: Distance. Children located far from cities have less choice of shools. When no transport is available, they have to walk long distances or are not able to go to school at all (since the distance is just too far). A study of the relation between student perfor- mance and distance (measured in travel time) to school in the United States (Talen, 2001) showed that living further from school has a negative impact on school results. A study in another developing country, China (Knight et al., 2008) showed similar results. This is also true for Indonesia.

Now that the distribution of schools (and thus quality and accessibility) over Indonesia is known, we can compare this with the distribution of eco- nomic growth. There are several studies on economic income disparity of the regions of Indonesia (Resosudarmo & Vidyattama, 2006; Haryanto, 2001). They all show two things. The first is that poor regions are growing faster than the rich regions (so there is convergence). The second thing the stud- ies on disparity show is a national disparity index, but no detailed regional data. There is unfortunately no recent data available on regional economic growth. Since we do know that economic growth reduces poverty, we can use a regional poverty index as a proxy for economic growth: The poorest regions are the ones that have a history of poor economic growth. Figure 4.11 shows the distribution of poverty (percentage of the population under the poverty line) over the regions of Indonesia. West Indonesia (consisting of Java, Sumatra and Bali) has almost all of the large cities and regions with large cities have the least poverty (Jakarta, Bali, Banten, etc.). As discussed earlier this is were most options for schooling are available and schools are of higher quality and more accessible. Next are the rural areas close to the center of power (Jakarta): the provinces of Java, Sumatra and Kalimantan (which is considered part of the eastern half of Indonesia). These more ru- ral areas have less schools and less quality than the cities, but still offer a reasonable choice. These areas all have a lower poverty index than the re- mote regions: Papua, Maluku, Aceh the provinces of NTT. The options for quality schooling are low to non-existing here and poverty is highest. Figure 4.11 does show that the poverty in the poor regions is reduced faster than in the richer regions, but sustained growth has to come from structural im- provements in education and does not happen through occasional transfers of funds from central to remote regions.

Msc Thesis, B. van Schaik (1294563) 50 Indonesia’s Education Policy

Figure 4.11: Poverty in Indonesian provinces. source: BPS

Examining the Research Question The first section of this chapter proved that there are significant differences between the schools in Indonesia. Several variables can be used as proxies for the factors quality and accessi- bility and based on these variables the stereotypical schools of Indonesia are described in the second section. The third section analyzes the distribution of these stereotypical schools over the regions of Indonesia and relates this to the regional poverty index (as a proxy for economic growth). Low quality and less accessible schools are found in regions with high poverty and higher quality and more accessible schools are found in less poor regions. The dis- tribution of low quality and less accessible schools matches the distribution of poverty which leads to the conclusion the research hypothesis cannot be refuted based on this research.

The first chapter introduced the central question of this thesis: ”Are the goals of the Indonesian education policy attained in practice?”. Chapter 2 described the theory of economic growth and the role of education in it. It also introduced the Indonesian administrative and education system. Based

Msc Thesis, B. van Schaik (1294563) 51 Indonesia’s Education Policy on the theory, chapter 3 presents a policy model that can be used to evaluate the Indonesian education policy. The research hypothesis following from the policy model can not be refuted based on the empirical study described in the first part of this chapter, and the research question can be answered:

The goals of the Indonesian education policy are not attained in prac- tice.

Discussion of the Results

This second part of chapter 4 discusses the results of the analysis. First the validity of the conclusion is discussed. After this, the implications of the education policy not attaining its goals are described and some considerations for future policies are mentioned.

Validity of the Results The results of the analysis show a relation be- tween poor schooling and poverty (as a reverse proxy for income growth), but several studies show that disparity between the regions is decreasing. Altough this might suggest that the education policy is reaching its goals, this is not the case. As the policy model shows, there are two other factors (treated as external factors in this study) influencing growth: savings and population growth. If these external factors are assumed similar for al re- gions, education should have an equal influence on income growth. In reality they vary and economic growth is a composite of several factors. In this case one is the increase of capital in the poorer regions. The central government has changed the redistribution of income from natural resources several times to prevent uprising in the poor but natural resource rich remote regions (from which the money was extracted through heavy taxes on natural resources). The studies claiming that disparity decreased are probably correct, but they were all conducted after a new tax redistribution law was adopted and they were intended to measure just that. As we know from the Solow model for economic growth, changes in capital and labor force only temporary increase economic growth. For sustainable growth, an investment in education is necessary. Since the central regions have a head start, boosting growth by investing relatively more money to reduce disparity helps but is not enough. The results of this study suggest that the money in the remote regions is better invested in education and this does not happen by itself. The tempo- rary boost from more capital only increases consumption temporarily and is of no help for structural improvements this way. The effects of poor quality and less accessible education in the remote regions are thus (temporarily)

Msc Thesis, B. van Schaik (1294563) 52 Indonesia’s Education Policy dampened by injections of capital. Although it is not clear how much the effect is dampened, there likely is suboptimal economic growth due to lack of education.

The distribution of the stereotypical schools over Indonesia is based on ex- pert interviews, experiences from (temporary) migrants and information from literature and media. This does provide a good overview, but not an exhaus- tive listing with estimates for quality and accessibility of schooling in each region. Such a listing is necessary to test for a significant difference and prove correlation. Future studies on this subject should focus on gathering reliable numbers for all regions to confirm a statistically significant correla- tion. The comparative analysis of schools resulting in the school stereotypes is conducted in and around the city of Malang. Although experts confirm the existence of these stereotypes throughout Indonesia, a similar case study in a large city outside the island of Java would increase the external validity of the stereotypes.

The Consequences of School Inequality The policy model of chapter 2 shows that the education system has an important influence on economic growth. A deeper analysis of the education system shows a relation between the quality and accessibility of schools and economic growth. If we recall the mission of the Ministry of Education of Indonesia, the focus is on quality and accessibility of education. The operationalized goals of the policy are that the participation percentage of 94% of the (eligible) children at elementary school must be maintained and the participation must reach 97,5% for ju- nior high school. Short of the minor numeric problem (how does the 3,5% of students without an elementary school diploma get into junior high school?), education for the Ministry does not mention senior high school or any form of higher education. It only concerns the compulsory SD and SMP. Although these should be free, all formal schools visited still charge the monthly SPP. The problems concerning SMA are not addressed by the policy.

The central island of Java contains little more than half of Indonesia’s pop- ulation and another 20% lives on the island of Sumatra. Given the huge number of inhabitants, 1% of Indonesia’s population is already 2,35 million people. We know that the accessibility of schools is unevenly distributed and schools are less accessible (or not present) in remote regions. But the per- centages are nationwide and no distribution is specified. Thus it fits within the current policy goals that thousands of children in remote regions have no access to schools at all. The problem for the places that do have schools is

Msc Thesis, B. van Schaik (1294563) 53 Indonesia’s Education Policy that the quality of the schools is not homogeneous. The participation num- bers may actually be high for some cities, but the accessibility of the few high quality schools is definitely low. Another operational goal is that by 2009, 40% of elementary schools, 50% of junior high schools and 50% of senior high schools should be on or above the national standard level. The precentage of schools that are accredited by the end of 2008 are respectively 28%, 24% and 78% for the city of Malang. The quality standard is not even reached in an average city in Java and it is worse in rural areas and remote regions. The education policy might be designed to support innovation, but there clearly is an implementation problem. A nationwide Indonesian knowledge economy will not be a fact by 2025 if this problem is not addressed.

The Need for a Policy Change As discussed in chapter 2, Indonesia has become more decentralized and this is considered good for education systems (Glewwe, 2002; Jamison et al., 2007). Other studies (Bjork, 2004; Kristiansen et al., 2006) confirm that Indonesia’s education system is becom- ing more and more decentralized, but that central government intervention is needed for more equality. Kristiansen demonstrates that the knowledge level of children in public schools is 33% higher than in private schools and even 50% higher in the cities of Java than on more remote Lombok. The differ- ence between public and private schools comes from a difference in budget: public schools simply have more funds. The cause of the central-remote di- vision may lie in the asymetric (re)distribution of money over the regions of Indonesia. The national government wants to garantee that the income from exploitation of Indonesia’s natural resources is equally divided over all its nationals. In practice, this means that money is taken from natural resource rich and low population remote regions and is poored into natural resource poor and densely populated Java. Regions are allowed to tax land, property and partly natural resources, but only receive little tax from oil, gas and mining. Javanese regions thus have tax income from local rice farming, but Papua does not have much tax income from its mining industry nor does Aceh have much tax income from its natural gas reserves. Although this asymmetry has become less in recent decades (Resosudarmo & Vidyattama, 2006; Haryanto, 2001), it still is substantial and regularly causes political unrest. If Indonesia has designed a good policy, but the implementation fails, then who is to blame for this? Is it the national government for its asymmet- ric money policies? Is it the Ministry of Education or Ministry of Religion for not having built proper checks and balances in the education system? Or maybe the regions for being too bureaucratic? What about the local commu-

Msc Thesis, B. van Schaik (1294563) 54 Indonesia’s Education Policy nities? Shouldn’t they hold the schools accountable for their performance? All stakeholders are pointing the finger of blame towards each other and this just might be the problem. In the process of decentralization, the respon- sibilities were dispersed too. Giving a single actor responsibility generally works, but having several actors share the responsibility for one task usually results in procrastination and negligence (Levitt & Dubner, 2005). Properly allocating responsibilities increases accountability.

When comparing Indonesia to the rapidly developing BRIC4 countries on the Human Development Index5, it scores lower than Brazil, Russia and China (but higher than India). These countries have different administrative systems (ranging from federated to centrally guided), but have one thing in common that Indonesia does not have: a single large land surface area. Of course the BRIC countries have areas that are difficult to access as well. The Tibetan High Plateau was recently dubbed the most remote place in the world by the European Commission’s Joint Research Center6, but still China is building a railroad to it to make the region better accessible (Gif- ford, 2007). For Indonesia, with its more than 17.000 Islands, this is just impossible. Transport to remote islands is either too slow but cheap or fast but too expensive. Until the day a new form of relatively cheap and fast transport between islands is found, building and supplying the schools in remote regions will always be relatively more expensive. This fact must be taken into consideration when designing nationwide and regional policy

4BRIC: Brazil, Russia, India and China 5UN Development Program. 6http://www.jrc.ec.europa.eu

Msc Thesis, B. van Schaik (1294563) 55 5. Conclusions and Recommendations

This last chapter summarizes the research in three sections. The first section sketches the goals of the Indonesian policies. The next section describes the actual situtaion and the third section provides some recommendations. A final section notes the limitations of this study and places the results in the broader context of economic growth.

What was Supposed to Happen

Participating in the international economy provides options for increased economic growth. The knowledge economy is driven by the cumulative pool of knowledge. This pool of knowlegde is increased through the process of innovation. By effectively using knowledge spillovers, developing countries have a chance to catch up with the developed world. For this a minimum absorption capability is necessary. Education is key for both innovation and maintaining the absorption capability. Several large developing countries (India, China, Brazil) have been experiencing high economic growth in the past decade. Indonesia seems to be lagging in terms of economic growth. The Indonesian government recognizes the importance of education and aims to be a knowledge economy by 2025. For this, the education policy is designed to provide quality schools that are accessible to all its citizens. But are these goals attained in practice?

What Actually Happened

In the relatively rich cities of Java, education is available in all forms from non-formal to elite schools. Although the quality varies (with the budget available), education is accessible. Outside the cities primary education is available, but the quality is less and there are no elite or non-formal schools

56 Indonesia’s Education Policy

(only regular public and private schools). The poor, remote regions have limited options. For those willing to walk the distance to school, public and some private primary schools (and sometimes secondary schools) are avail- able. The quality however is low and in some places the travel time is so high that schools become practically inaccessible. The policy goal of quality education for all Indonesian citizens is not attained. The policy might be good, but the implementation fails.

The problem possibly lies in the dispersion of responsibilities and the asym- metric (re)distribution of funds by the national government. The respon- sibility for education on a national level is shared by two Ministries: the Ministry of Education and the Ministry of Religion. These generally point to the regions for any errors in the implemention. The regions are bureau- cratic and are more concerned with staying long enough in office to recoup their ”campaign investments” than with organizing education improvement programs. They emphasize the autonomy of the different types of schools and the responsibility of the schools for improving and maintaining their own quality. Education is a public good and relying primarily on the free market to provide it is a recipe for trouble.

Rural areas and especially remote regions have both higher costs and less funds available. Indonesia heavily taxes the exploitation of natural resources in the remote regions to support the public facilities of the masses living in and around the central region of Java. The redistribution of money is currently based on population density.

How to Make it Happen

After determining what should happen and concluding what is happening, the question remains how to minimize the difference between goals and re- ality. First of all, the accountability for quality and accessibility could be greatly improved by getting the incentives and responsibilities right. The national responsibility for education should be placed under a single min- istry. Since education is a public good, why not provide it through public shools? The public schools perform better than the private schools of In- donesia. The nationalization of all schools will also make clear that the state is responsible for education and no fingers can be pointed at private parties. This also reduces the possibilities for rent seeking for school management. But nationalization can be risky in a corruption prone environment. Another option might be to introduce education vouchers with which the students

Msc Thesis, B. van Schaik (1294563) 57 Indonesia’s Education Policy can freely select the school they want. Provided there are enough schools available and students actually have a choice, a voucher system introduces competition between schools and provides an incentive to improve quality. If all schools are similar and transparent, the costs can be compared and there is less room for ambiguous fees.

The nationalization of schools or introduction of a voucher system will of course incur extra costs. Private schools are now directly paid by parents and these costs are then transferred to the government. The governments should cover these costs with income from taxes (which is the common way of providing a public good). If this type of nivellation is properly organized, the poor contribute less to the costs of education of their children and the rich more. This reduces inequality.

Lastly, the redistribution of money should be fair and cost-based instead of population-based. The regions that exploit their natural resources usually have less manufacturing and agriculture. These last two are effectively taxed regionally and the first nationally. Although the goal of letting all Indone- sians profit from the exploitation of the natural resources is noble, the taxes should be proportional so that the regions have at least a similar amount of income left as the non-natural resource rich regions. The costs of a school in remote Papua (where almost everything needs to be imported) are higher than a school in central Java. The distribution of money should take this fact in to account. Instead of providing the same amount of money per student for all regions, this should be the amount of money needed to provide the same quality and accessibility for each student. Due to decades of asymmet- ric redistribution of money, the central regions have a major head start. A temporary subsidy for the regions that are running behind is needed until at least the same number of schools per children is reached in all regions.

Concluding Remarks

In this thesis the education system of Indonesia is studied in detail. As the policy model shows, there are also other factors relevant for economic growth. Encouraging savings and curbing population growth (especially in Java) and participating in the globalizing world are also important. The de- velopment of corruption free, functioning institutions is necessary to increase transparancy and accountability. To give an idea of the possible impact of other factors: a health study (Thomas et al., 2003) where groups of Indone- sian workers were given iron supplements to combat the anemic effects of

Msc Thesis, B. van Schaik (1294563) 58 Indonesia’s Education Policy intestinal worms showed that this increased average productivity by 20%.

This thesis work is done in a limited timeframe and is a snapshot of the current state of education in Indonesia. Although the hypothesis is refuted based on reason, it would be good to confirm it with a statistical test. The determining of school stereotypes can be repeated in another (preferrably non-Javanese) city to increase its external validity. If the number of the school types per region can be obtained, this, provided the data is credible and accurate, enables statistical testing of a significant difference between the regions. It would also be interesting to compare the impact of culture on the education system by comparing Indonesia with culturally related and un- related countries. Systematically comparing results from such studies might provide useful clues for a general method of improving an education sys- tem, contribute to higher economic growth and offer options for escaping the poverty trap.

Msc Thesis, B. van Schaik (1294563) 59 A. Individual School Data

This appendix contains detailed descriptions of the schools that were visited. At the schools, the school head, some members of the school staff and teachers were interviewed. At junior and senior high schools students were interviewed too and at least three different classes were requested to fill in a questionnaire, resulting in about 100 questionnaires per school. Although permission was granted by the municipal head of education to research the schools, some schools were more cooperative than others.

A.1 SMA Negeri 5

This is the largest of the elite schools in Malang. SMA Negeri 5 is a public school and has the highest accreditation (A). Bright (and rich) students from all over the region try to enter this school. This can be done by having above average grades from the national SMP exam and paying an entrance fee of 9 million Rupiah. Each year students that just graduated from SMP register and the elite schools basically pick the top students from this list. The school claims to be flexible toward poor students with high scores and says it allows a maximum of 10% of students from poor families (who can not pay the fees) to enter. Parents of those students are allowed to negotiate a fee they can afford. Students who are not able to maintain a high average grade are requested to move to another school. This school has won a national award for cleanest, most peaceful environment, is ISO2000 compliant and adheres to the national plus standard (part of the curriculum in English). As an extra the school uses the Cambridge curriculum for mathematics, physics, chemistry and English, for which students pay 1 million Rupiah per exam each year. The school is has more than 1000 students divided over 28 classes.

The facilities are complete and of good quality. Although the national policy requires all teachers to have a Bachelor degree, the school itself demands a master degree. Besides this, teachers undergo an extensive in house training program and are sent to English First (a British language institute with na-

60 Indonesia’s Education Policy tive speakers) for language training. Teachers are required to have a TOEFL score above 500, school staff above 400. The monthly school fee varies be- tween 125.000 and 200.000, depending on the year the student is in (later years are cheaper). Besides the normal curriculum, students can choose one of several languages: Mandarin, Japanese, German, French or Arab. The school building, facilities and teachers are paid by the government. Since this year the school receives a block grant of 310 million Rupiah. From next year on they are not allowed to charge monthly fees anymore and have to do with the block grant. Most of the students (about 80%) continue their education at one of the elite universities. The students are all in good health, serious and rarely skip classes. In the hallways some are speaking to each other in English instead of Indonesian. The school regularly donates old equipment and books to schools in the remote region of Indonesia. (Sources: Interviews with school head, staff and teachers and visits to classrooms).

55% of the students go by motorcycle, 28% by public transport and 12% is brought by parents (car or motor) or joins a friend on the motor. The rest either walks or bicycles to school. The average travel time is about 22 minutes and average travels costs 4100 Rupiah (per day). About 31% of the students join extra lessons at school and 52% at private institutions or teach- ers (some at both, there is overlap). The latter costing an average 216.000 Rupiah per month. The average grade is 76 and average allowance about 7500 Rupiah (per day). 54% of the students has a friend that dropped out of school, in all but two cases this was because of financial reasons. 70% of the students did not find it difficult to enroll in this school. 21% found it difficult and the remaining 9% rated the entrance requirements as normal. All stu- dents live with their parents or close relatives of their parents. 61% claimed their parents easily coped with the costs of schooling and the remaining 39% rated it average. The average student has 3,14 brothers and sisters. (Source: questionnaire among students)

A.2 SMA Taman Madya

This private school is part of a larger system of schools (Taman Siswa). These schools were the first schools for Indonesian natives during the colonial era. Poor Indonesians could not afford (Dutch) schools and one day a rich sul- tan decided to fund Taman Siswa schools (accessible for all children). It’s a ”clean” private school (as the school head himself describes it) with an A ac- creditation. This means that they are completely funded by non-government sources. The reason is that the school values its independence and does not

Msc Thesis, B. van Schaik (1294563) 61 Indonesia’s Education Policy want to be forced to accept learning material they don’t agree with. Besides normal lessons, the school also teaches the students (Javanese) norms and values and has a strict enforcement of rules and regulations. The school does not agree (but has to accept) that the national exam is in only three subjects and a few days. According to the school head, learning is a process. What if a good student has problems at home during the days of the final exam? Should he fail because of this? The school does not select on wealth and receives children from street vendors to rich business people. Because of the extended attention of the school for its students, a lot of troubled children are sent there. The school tries to get them on the right track again. The school even has its own psychologist for this.

Taman Madya is a big complex and consists of a SD, SMP and SMA. The SMA school has about 1000 students. Monthly costs (SPP) are 93.000 Ru- piah, but there is an additional fee of 120.000 Rupiah for costs of computers, learning material and a student saving fund. The savings are used for projects which the student mostly initiate themselves. Recently the students wanted to buy music instruments and gathered 500.000 Rupiah for this. They needed 1 million Rupiah and the school funded the remaining half from the savings. Poor children can ask for dispensation of payments and in some cases nego- tiation of the SPP and other costs is possible. Everyday there are two hours of extracurricular lessons offered at Taman Madya (by non-Taman Madya teachers). These cost 320.000 Rupiah per year. The school has only very basic facilities like a library and a basketball/soccer field. The school did not provide any information on entrance fees. (Source: interview with school head)

38% of the students go by motorcycle, 33% by public transport and 23% is brought by parents (car or motor) or joins a friend on the motor. The rest either walks or bicycles to school. The average travel time is about 19 minutes and average travels costs 3800 Rupiah (per day). About 95% of the students join extra lessons at school and 64% at private institutions or teach- ers (some at both, there is overlap). The latter costing an average 222.000 Rupiah per month. The average grade is 62 and average allowance about 7000 Rupiah (per day). 55% of the students has a friend that dropped out of school, in almost cases this was because of financial reasons. However in 6 cases the student was too lazy to study, in two cases it concerned a pregnant girl (who has to leave school according to regulations) and in one case it was due to sexual harrasment. 94% of the students did not find it difficult to enroll in this school. 4% found it difficult and the remaining 2% rated the entrance requirements as normal.

Msc Thesis, B. van Schaik (1294563) 62 Indonesia’s Education Policy

Most students live with their parents or close relatives of their parents, 5 stu- dents reported they live in a rented room. 57% claimed their parents easily coped with the costs of schooling, 19% rated it average and the remaing 24% reported their parents having serious problems with the costs. The average student has 3,08 brothers and sisters. (Source: questionnaire among students)

A.3 SMP Negeri 5

The school is an A accredited public school. It’s located in an old Dutch building and has about 1000 students. SMPN 5 is one of the elite schools, meaning students are selected for their learning abilities (IQ) and the ability the pay the costs. The school has large grounds and very good facilities. The buildings are in good condition, and the school cafeteria is actually a sort of mini food court. There are regular classes, acceleration classes (SMP in two years instead of three) and RSBI1 classes. This means a part of the lessons is in English. The teachers at the school were quite knowledgeable and utilized every opportunity to practice their English. Young graduates are employed to teach extra lessons (mainly English) after regular school hours and the school is a popular place for university students doing an in term.

Although this is a public school, students pay a monthly fee referred to as SPP. This is 100.000 Rupiah for normal classes, 200.000 Rupiah for RSBI classes and 220.000 for acceleration classes. Students enter the school through the placement system of the municipality (based on SD national exam grade averages). For RSBI classes there are additional entrance tests. The school did not provide any information on entrance fees. The curriculum is standard for SMP and the books provided by the government. SMPN 5 actually has the books available for download on their website. (Sources: interviews with school head, staff, teachers and in terms and visits to classrooms)

26% of the students go by motorcycle, 21% by public transport and 45% is brought by parents (car or motor) or joins a friend on the motor. The rest either walks or bicycles to school. The average travel time is about 17 minutes and average travels costs 3500 Rupiah (per day). About 92% of the students join extra lessons at school and 40% at private institutions or teach- ers (some at both, there is overlap). The latter costing an average 210.000

1Rintisan Sekolah Bertaraf Internasional - on the road to becoming an international standard school

Msc Thesis, B. van Schaik (1294563) 63 Indonesia’s Education Policy

Rupiah per month. The average grade is 82 and average allowance about 7000 Rupiah (per day). Only 10% of the students has a friend that dropped out of school, in almost cases this was because of financial reasons. In 2 cases the student was too lazy to study. 21% of the students did not find it difficult to enroll in this school. 65% found it difficult and the remaining 14% rated the entrance requirements as normal. All students live with their parents or close relatives of their parents. 58% claimed their parents easily coped with the costs of schooling, 38% rated it average. 2% reported their parents having serious problems with the costs and 2% claimed not to be able to pay at all. The average student has 2,90 brothers and sisters. (source: questionnaire among students)

A.4 SMP Kristen Kalam Kudus

This is a private, A rated school. The school was founded by a Chinese Christian. Although still Christian, the larger part of the students is now Javanese. The school emphasizes the role of the parents in the education of their children. The school head explained they don’t think it is good the keep students at school from 7:00 until 16:00, so they do not facilitate additional lessons. Instead, they expect the parents to help their children with homework. The rules are very strictly enforced. When a student does not show up, the parents are immediately notified. If they don’t know where their child is, someone from the school usually goes out to search the student. About half of the books can be borrowed from school, the other half students need to buy on their own. Books are to expensive for some students (average 40.000 Rupiah), but students are allowed to use the free version provided by the government. These can be downloaded, but often the server is over- loaded. Printed versions can be bought at 10.000 Rupiah per book. SMP Kalam Kudus is a complex of SD, SMP and SMA. At the SMP there are a total of 141 students divided over 6 classes. About 40% of the students go to the SMA at the same complex. The rest continues their education at other schools, mostly SMK (Vocational schools). To enter the school, students complete an academic test and pay a fee of 1.500.000 Rupiah. The monthly costs (SPP) are 200.000 Rupiah. Each year the costs for extracurricular ac- tivities are 1.200.000 Rupiah. Poor students however can get a discount on the SPP and are sometimes permitted to delay payments (in one case up to 6 months). Diploma’s are only given after all payments are done. This sometimes results in diploma’s being kept back for several years. (Sources: interview with school head and teachers)

Msc Thesis, B. van Schaik (1294563) 64 Indonesia’s Education Policy

28% of the students go by motorcycle, 22% by public transport and 33% is brought by parents (car or motor) or joins a friend on the motor. The rest either walks or bicycles to school. The average travel time is about 18 minutes and average travels costs 3400 Rupiah (per day). About 17% of the students join extra lessons at school and 25% at private institutions or teach- ers (some at both, there is overlap). The latter costing an average 160.000 Rupiah per month. The average grade is 73 and average allowance about 6500 Rupiah (per day). 32% of the students has a friend that dropped out of school, in most cases this was because of financial reasons. Three cases were reported as lazy students and two because of family problems (probably financial problems as well). 84% of the students did not find it difficult to enroll in this school. 6% found it difficult and the remain 10% rated the en- trance requirements as normal. All but one student lived with their parents or close relatives of their parents, the one exception rented a room. 41% claimed their parents easily coped with the costs of schooling and 48% rated it average. 8% reported serious difficulties and 3% was not able to pay all costs. The average student has 3,03 brothers and sisters. (Source: questionnaire among students)

A.5 SD Negeri 2 and 4

Both these public schools are located in the same building complex in a vil- lage just outside Malang. It’s a large U-shaped building with some shared facilities in the middle (like the staff offices and the basketball field). Each school has 5 classrooms, 6 teachers, a guard and a school head. The schools are to merge in the coming year. SD Negeri 2 has 130 students and SD Negeri 4 has 118 students. The building is clean and in good condition. There is however no multimedia facility. The students are all from the village and walk to school (longest distance 1 kilometer). Almost all children go to SMP after this school, each year one or two students find a job after their SD ex- ams. The nearest SMP is only 2 kilometers from this school. Of course there are occasionally sick students (each day one or two for the whole school), but the students are in good health. There are no students skipping class or dropping out of school.

The curriculum consists of Kewarga Negaraan (national affairs), Indonesian, religion (all religions), mathematics, Social sciences, Exact Sciences, Local language (Javanese), English, SKB 2 and sport. Students take an entrance

2Seni Budaya Ketrampilan - Art and culture

Msc Thesis, B. van Schaik (1294563) 65 Indonesia’s Education Policy test before they are received at this school. The test consists of counting and recognizing letters, shapes and colors. The students parents mostly own small businesses and farms or have a government job. The students are very polite and not shy. When given the chance, they have interested questions about schools in the Netherlands and the differences in welfare and religion. Unfortunately there was no financial information available. (Sources: Interview with teachers and visit to classroom)

A.6 SD Islam

This is a private school located at the edge of the city (Mulyorejo) of Malang. Public and general private schools teach all religions. This particular private school, as the name suggests, only teaches Islam. It is not one of the religious school of the Ministry of Religion, but a normal curriculum school under the rules and regulations of the Ministry of Education. The school is located near a garbage dump (which is clearly noticeable). There are almost no facilities besides the building and some parking space. The building is just enough to house all the students and is in a poor condition. Some of the classrooms have small leaks in the roof.

There are 147 students in 6 classes. The curriculum consists of 5 courses: Re- ligion (Islam), State doctrine, Social Sciences, Exact Sciences, Mathematics and Indonesian. Occasionally some English is practiced. Most parents of the students are poor and a large part can not read or write. The parents that do have a job mostly work at the garbage dump (garbage collector, selling recycled items). In these families there is little to no attention for education. The students get 5 hours of lessons each day at school, but nothing happens at home. Children often skip school and are often sick. The school organizes periodic (13 week) health checks at school in cooperation with the neighbor- hood health center (Puskesmas).

The monthly SPP is officially 15.000 Rupiah for the first three years and 20.000 Rupiah for the last three years. A lot of parents are regularly not able to pay and this results in an average real SPP of 10.000 Rupiah per student per month. The costs per child should be financed from the BOS 3, which is now 19.000 Rupiah per student per month. It used to be 21.000 Rupiah per month. Although all prices have increased, the BOS has not increased in the last 5 years. The last time the BOS covered the actual costs was 3 years ago. Sometimes the school receives a donation of a few hundred

3Bantuan Operasional Sekolah - Operational school help

Msc Thesis, B. van Schaik (1294563) 66 Indonesia’s Education Policy thousand Rupiah from private persons or foundations. Besides SPP, students need school uniforms (one time costs of about 90.000 Rupiah per child) and workbooks. The workbooks costs about 4000 Rupiah and are used for a pe- riod of 6 months. The extremely poor students sometimes get the workbooks for free. Since 2006 the municipality provides books that the students can borrow.

All students live in the direct neighborhood of the school. They come and go alone or with classmates, all by foot. About 10% of the students live 3 kilo- meters (longest distance) from the school. Families have no money for public transport and the nearest SMP is 5 kilometers from this neighborhood. The practically means about 40% of the children do not continue their education after SD. Most families live on 20.000 Rupiah per day and the costs of just daily transport (4000 Rupiah) and food at school (about 2000 Rupiah) are already unbearable.

The children at this school rarely leave their neighborhood and are unused to (white) foreigners. This makes it difficult to talk to the students. They are very shy and some even freeze and refuse to talk at all. Some children look scruffy and are clearly in bad health. The school has little facilities and has trouble attracting good teachers. As a result the level of education is low. After a short introduction about the Netherlands and Europe, the only type of questions asked were what animals live in the Netherlands and what people eat. Subsequent questions were all the same, just the particular species or dish changed. When children were instructed to answer in Indone- sian instead of Javanese, some were clearly not aware of the differences and unable to comply. This holds for both the lower and higher school years. (Sources: interviews with school head and teachers, visits to classrooms)

A.7 SD LAB UM - English conversation club

This was actually not a school visit, but a visit to a group of students from an international standard SD (SD Lab at the state university of Malang). These students (6th grade) have regular English conversation practice. They were able to have a conversation in English about their family, pets, life at home and at school. Surprisingly, their English was even better than that of some teachers at average SMP or SMA schools. These children had inter- esting questions (in English) about schools and family life in the Netherlands.

SD Lab is a private, elite SD school with an A accreditation. To enter,

Msc Thesis, B. van Schaik (1294563) 67 Indonesia’s Education Policy students take an entrance test and pay an entrance fee of 6.000.000 Rupiah. The monthly costs are about 300.000 to 400.000 Rupiah. Besides this, stu- dents regularly have to join extra lessons for which the parents are charged separately (”the other day my mom got a letter that she had to pay 300.000 Rupiah for extra lessons”). (Sources: interviews with the teacher, one parent and the students)

A.8 Sanggar Kegiatan Belajar (Negeri)

SKB is non-formal school. There is only one SKB in Malang, located in a poor neighborhood in the northern part of town. Like formal education, non-formal education comes in private and public forms. SKB is a public institution and its employees are civil servants. The teachers here only get 40% of the salary a teacher at a formal school receives. Municipalities can decide for themselves if they have the need for an SKB. Some municipalities claim that their city has no problems in education since they have no SKB. The existence of an SKB can thus depend on local politics.

Besides non-formal education leading to a general diploma (Paket A, B and C), SKB also provides vocational training. There are short courses for salon skills (haircutting, make up, etc.), sewing clothes, mechanical skills, wood carving and graphic design. Since most of the students don’t really have a chance, even with paket C, the focus is on the vocational skills. There is about 30% theory and 70% practice. One school year at SKB is actually only 6 months. This way its easier to stay enrolled and less of a burden to to double a class. Some small enterprises (garages, salons, etc.) look for students here even before they officially graduate. SKB is a good source of cheap but low-skilled labor. The complex of buildings is in good shape and there is a dorm on the premises for homeless students. They can stay there while enrolled. Facilities are good and the school has a lab with new com- puters. New funds made the school decide to build a school mosque.

The vocational classes are in the morning and afternoon, the theory (paket A, B and C) mostly in the evenings. The students are rather rude and rough. Some have (or had) jobs in the criminal circuit or work at the nearby brothel complex. The school used to have a guard (like all formal schools) to keep the students on the premises. Unfortunately SKB did not have enough money to put a fence around the whole facility. Students could still escape and skip classes. To reduce costs, the guard was fired. Attendance can be a problem. Students are not allowed to enter with dirty uniforms (they are given free

Msc Thesis, B. van Schaik (1294563) 68 Indonesia’s Education Policy uniforms). When it rains, they have difficulties cleaning and drying their uniform, which is a reason to skip classes for them. There are about 100 stu- dents, all of them living nearby. The longest travel time is about 15 minutes (by foot). The ages of the students are normal for SMP students. Most of the students came form formal SD schools and plan to find a job after graduating this school. Allowance or travel costs are mostly non-existent. Studying at SKB is completely free. There only limited places available though. (Sources: Interviews with school head, staff and teachers and visits to classrooms)

A.9 Pusat Kegiatan Belajar Masyarakat

A PKBM is a private, non-formal school. There is one in each neighbor- hood, so all potential students have access. In Malang there are 7 PKBM’s of varying quality. Usually several PKBM’s are united in a foundation. The funds come from firms and the government. Anyone can start a PKBM, but in order to receive funds you have to send a proposal to the govern- ment. Competition is fierce and some years the proposal is rejected. Money awarded for one year is thus used over several years. Most PBKM’s rent classrooms of regular school’s in the evenings. One PKBM however owns its own building. The building has three classrooms of which only two can be used during heavy rains. The school offers several parallel paket A, B and C classes and is almost continually used (morning to evening, all days of the week). They do not offer vocational skills (not enough funds), but do work closely with the government sponsored SKB. The students here are generally highly motivated, but face difficult problems in their daily life (one young mother brought her child to class). Students at PKBM’s in the poorest parts of the city differ from the better neighborhoods (no rude, loud, nine-year- olds demanding cigarette breaks) No school uniforms are used and the school forgives students who are late or have not completed their homework. Most of the time reasons to come late or not complete assignments are related to a students job. Most students are street kids and children from poor families.

Reasons to go to PBKM are a lack of money, the need for more direct guid- ance and failing the exams at formal schools. There are no costs and everyone is welcome. Since a PKBM has a very low status, most image-aware Javanese go through great lengths to put their children in a formal school. PKBM’s are free but not overloaded with students. There is a maximum of 20 stu- dents per class (compared to most formal schools where the average is 40 to 50 students per class). The teachers are sometimes paid, but the larger part consists of volunteers. All do have at least a Bachelor degree (same

Msc Thesis, B. van Schaik (1294563) 69 Indonesia’s Education Policy requirement as in formal schools). The largest PKBM has about 700 to 800 students. All live nearby and most walk to school (longest distance about 4 km, a 30 minute walk). Most students come from formal SD and SMP schools. Almost all have plans to go to university after studying at PKBM. Last year (2008) 4 students who graduated paket C where received at the two most prestigious universities in Malang, proving that PBKM is a real alternative to a formal school. The students at PKBM are of mixed ages, some are in their late twenties or early thirties. (Sources: Interviews with school head, staff and teachers and visits to classrooms)

Msc Thesis, B. van Schaik (1294563) 70 B. Indonesia School Statistics

This appendix contains statistical data from the municipality of Malang. Some data was available from their website at http:///www.malangkota.go.id. Other data has been made available by the municipal department of educa- tion (Diknas) in printed form.

Education % not yet 14,1% SD/MI 24,01% SMP/MTs 19,19% SMA/MA 23,19% SMK 7,83% D1/D2 1,13% D3 1,77% S1 8,15% S2/S3 0,63%

Table B.1: Malang education distribution (2005)

71 Indonesia’s Education Policy

# Schools Type # Teachers # Students SD 242 public 12838 SD 57 private 45188 Total 299 1001 58026 SMP 22 public 973 19330 SMP 67 private 2098 25351 Total 89 3071 44681 SMA 12 public 706 8825 SMA 38 private 1040 12353 Total 50 1746 21178 SMK 6 public 689 5674 SMK 37 private 1142 17693 Total 43 1831 23367 MI 2 public 1802 MI 46 private 8030 MTs 2 private 98 1450 MA 2 private 140 1629 Total 52 12911

Table B.2: Malang school type data (2004)

Age Public Private Religious 6-12 19% 67% 14% 12-15 42% 55% 3% 15-18 31% 65% 4% Average 31% 62% 7%

Table B.3: Malang students per school type (2004)

Msc Thesis, B. van Schaik (1294563) 72 Indonesia’s Education Policy

Age # Students % 6-12 67.858 42% 12-15 46.131 29% 15-18 46.174 29% Total 160.163

Table B.4: Malang students per age group (2004)

Age # Population 0-4 59962 5-9 58763 10-14 61736 15-19 91409 20-24 120448 25-29 77345

Table B.5: Malang population per age group (2005)

Accreditation # Schools % Type # Schools % A 44 50% public 206 65% B 40 45% private 62 20% C 4 5% religious 48 15% Total 88 Total 316

Table B.6: SD data (only 28% of schools accredited) (2008)

Accreditation # Schools % Type # Schools % A 24 86% public 23 20% B 3 11% private 69 59% C 1 4% religious 24 21% Total 28 Total 116

Table B.7: SMP data (only 24% of schools accredited)(2008)

Accreditation # Schools % Type # Schools % A 29 63% public 12 20% B 14 30% private 35 60% C 3 7% religious 12 20% Total 46 Total 59

Table B.8: SMA data (78% of schools accredited, no religious schools)(2008)

Msc Thesis, B. van Schaik (1294563) 73 C. Summary of Questionnaire Data

This appendix provides a summary of the questionnaire and interview data. The data is gathered at the junior and senior high schools described in ap- pendix A. In all cases except at Taman Madya, the researcher distributed and collected the questionnaires. There is no information that directly idi- entifies the student. These measures are taken to garantee anonymity. The relevant variables from the questionnaire are entered and analyzed in SPSS. This appendix shows the descriptive statistics of the data. At the end of the appendix, an overview of the significance of the differences between the elite and non-elite schools is provided.Figure shows the orginal questionnaire and table C.1 provides a translation of the questions.

Table C.2 shows a summary of the key variables per case. The accreditation is A (best), B, C or none (-). The number of students is either provided by the school administration or based on estimation by the school staff and teachers. Data on Entrance tests and fees, SPP (monthly school fee) is gath- ered in a similar way. The facilities are estimated by the researcher and fall in four categories (superb, good, average, none)1. The average grade, travel time and costs are determined from the questionnaire. Also if students follow additional lessons at school (internal lessons) or at one of the many private institutions (external lessons) and at what costs (Ext. costs) and the aver- age family size (including parents) are determined from the questionnaire. The last value dropouts, states what percentage of students has a friend that dropped out of school. Measuring dropouts directly is difficult, since the students are not present at school anymore and schools are not particularly proud reporting such numbers.

1none: school building is in bad condition (leaky roofs); Average: The building is functional, but scruffy. Occasional sport field present; Good: The school has things like a restaurant (or food outlet) and library. Superb: The school is in top condition, clean and has good facilities (multimedia library)

74 Indonesia’s Education Policy

Msc Thesis, B. van Schaik (1294563) 75 Indonesia’s Education Policy

How did you hear about this school? Who chose this school for you? Where are you originally from? Where do you live now? How long do you travel from home to school? How much are the travel costs per day? Are there extra lessons at your school? Do you have extra lessons at another place? Did you ever change school? - if so, what was the reason? In what range are your average grades? Did you find it difficult to enter this school? - if so, why? How much is your daily allowance? Do you have extra lessons at another place? - if so, how much does it cost per month? Can your parents afford all the costs of schooling? Do you have friends that dropped out of school? - if so, what was the reason? How many brothers and sister do you have? How many of them are not in school yet? How many of them are in school? How many of them are already graduated? How do you travel to school?

Table C.1: translation of questionnaire (top to bottom)

Msc Thesis, B. van Schaik (1294563) 76 Indonesia’s Education Policy Dropout 54% 55% 10% 32% Avg. grade 75 62 82 72 Fam. Size 5,14 5,08 2,90 3,03 Facilities superb average superb good average none good none Allow. rp 7500 rp 7000 rp 7000 rp 6500 rp 0 rp 0 SPP rp 200.000 rp 213.000 rp 100.000 rp 200.000 - rp 20.000 rp 0 rp 0 Ext. Costs rp 216.000 rp 222.000 rp 210.000 rp 160.000 rp 0 rp 0 Case comparison Entr. fee rp 9.000.000 rp 3.000.000 - rp 1.500.000 - rp 0 rp 0 rp 0 Ext. Lessons 52% 64% 40% 25% 0% 0% Table C.2: Entr. test yes no yes yes yes no no no Int. lessons 31% 95% 92% 17% 0% 0% Students 1000 1000 1000 141 248 147 400 Tr. costs rp 4100 rp 3800 rp 3500 rp 3400 Accr. A A A A A - - - Tr. time 22 19 17 18 School SMA Negeri 5 SMA Taman Madya SMP Negeri 5 SMP Kalam Kudus SD Negeri SD Islam SKB (Negeri) PKBM School SMA Negeri 5 SMA Taman Madya SMP Negeri 5 SMP Kalam Kudus SD Negeri SD Islam SKB (Negeri) PKBM

Msc Thesis, B. van Schaik (1294563) 77 Indonesia’s Education Policy

Figure C.3 shows the travel time per school. The travel time per school does not show much variation other than that senior high school (SMA) students travel longer on average than junior high school (SMP) students. This is logical considering the junior high school density is higher. There are no significant differences between elite and non-elite schools. The transport costs per school show no significant differences (figure C.2.

Figure C.1: Travel time per school Figure C.2: Transport costs per school

Msc Thesis, B. van Schaik (1294563) 78 Indonesia’s Education Policy

Figure C.3: Travel time per school Figure C.4: Average grade per school

Figure C.4 shows the average and median grade is higher at elite schools. As figure C.5 shows there are no significant differences in costs of extra lessons between elite and non-elite schools. The costs of extra lessons are higher for most SMA students.

The bar chart in figure C.6 shows that the percentage of students with

Figure C.5: Costs of extra lessons per Figure C.6: Daily allowance per school school a high allowance is higher at the elite schools and the percentage of student with a low allowance is higher at non-elite schools.

Figure C.7 shows that students perceive it more difficult to enter the elite schools than the non-elite schools. The percentage of students that can easily pay all costs associated with school is higher at elite schools, as figure C.8

Msc Thesis, B. van Schaik (1294563) 79 Indonesia’s Education Policy

Figure C.7: Perceived difficulty to enter Figure C.8: Ability to pay school costs school shows. The SMP schools both have some students that are not able to pay the costs but yet still are enrolled. This is because SMP is compulsory and the schools generally accept some poor but bright students.

Msc Thesis, B. van Schaik (1294563) 80 Indonesia’s Education Policy

Figure C.9: Students that changed Figure C.10: Students that have a school friend who dropped out of school

The percentage of students that changed school is higher at the non-elite schools, as figure C.9 shows. Students at elite schools who are not achieving high grades are usually ”requested” to change school. Figure C.10 shows the percentage of students that have a friend who dropped out of school. This percentage does not differ significantly for elite schools, but is higher at at se- nior high schools. A possible reason might be that older students know more other students and that the risk of dropping out at SMA is higher (higher costs, not compulsory).

Figure C.11 shows the relation between average grade and the ability to

Figure C.11: Relation between grade Figure C.12: Relation between grade and ability to pay costs per school and ability to pay costs pay the costs per school. It’s cleat that students who have difficulty pay-

Msc Thesis, B. van Schaik (1294563) 81 Indonesia’s Education Policy ing the costs also have lower average grades. Students who are not able to pay the costs without exception score high, but this is due to the fact that students with low grades who are not able to pay the school fees are simply ”requested” to leave the school. Figure C.12 shows the aggregate boxplots. The relation between ability to pay the costs and average grades is even more clear in this figure.

Students that have friends who dropped out of school generally score lower

Figure C.13: Relation between grade Figure C.14: Relation between grade and knowing a dropout and mode of transport average grades (see figure C.13). The mode of transport does not influence the average grade for motorcycle, public transport or lift from parent/friend, as shown in figure C.14. Students who walk or bicycle to school (other) score lower average grades (possibly related to poverty problems).

Figure C.15 shows that students who perceived it difficult to enter their chosen school have higher grades. Students with low grades generally re- ported they not found it difficult to enter their school. Students who ever changed schools have lower average grades (figure C.16), which is logical since only students with low grades are requested to change school.

Table C.3 shows if the variables significantly differ for elite and non-elite schools at both junior high school (SMP) and senior high school (SMA) level. Because age does not have any valuable contribution, it is not tested. The variable extra lessons was subjected to a chi-square test at SMA level too, but because field had a value lower than 5 the test could not be completed. The interval variables were subjected to a less powerful non-parametric test (Wilcoxon-Mann-Whitney) because the conditions for Student’s T-test were

Msc Thesis, B. van Schaik (1294563) 82 Indonesia’s Education Policy

Figure C.15: Relation between grade Figure C.16: Relation between grade and perceived difficulty to enter school and changing schools not met. Levene’s test showed that the elite and non-elite groups in the sample did not have equal variances.

Msc Thesis, B. van Schaik (1294563) 83 Indonesia’s Education Policy

Variable Type Test SMP SMA Age interval - - - Travel time interval Wilcoxon-Mann-Whitney X X Transport costs interval Wilcoxon-Mann-Whitney X X Extra lessons binomial Chi-square S - Changed binomial Chi-square S S Grade interval Wilcoxon-Mann-Whitney S S Entrance difficult ordinal Wilcoxon-Mann-Whitney S S Allowance interval Wilcoxon-Mann-Whitney S X Costs lessons interval Wilcoxon-Mann-Whitney S X Ability to pay ordinal Wilcoxon-Mann-Whitney S S Dropout binomial Chi-square S X Mode of transport categorical Chi-square X X

Table C.3: Significance of variables (X=not, S=Significant)

Msc Thesis, B. van Schaik (1294563) 84 D. Factor Analysis of the Questionnaire Data

This appendix contains the details of the principal component analysis of 13 variables from the questionnaire data. The variables are screened, and submited to factor analysis in SPSS. The results are rotated and grouped in logical components. Lastly the relations between the components are ana- lyzed.

The following variables from the questionnaire are analyzed in SPSS:

1. School: school type {SMAN5, SMA Taman Madya, SMPN5, SMP Kalam Kudus} 2. Age: student age (in years) 3. Travel time: travel time between home and school (in minutes) 4. Transport costs: transport costs between home and school per day (in Rupiah) 5. Extra lessons: student taking extra lessons {true, false} 6. Changed: student ever changed school {true, false} 7. Grade: average grade (0 to 100 with interval of 5) 8. Entrance: how difficult student perceives school entrance test {easy, normal, difficult} 9. Allowance: student daily allowance (in Rupiah) 10. Costs lessons: the costs per month of extra lessons (in Rupiah) 11. Able to pay costs: ability of student to pay the school fees {easy, aver- age, difficult, not able} 12. Dropout: does the student have a friend who dropped out of school {true, false} 13. Mode of transport: how student travels to school {motorcycle, public transport, accompanied, other}

85 Indonesia’s Education Policy

Figure D.1: Correlation Matrix

Msc Thesis, B. van Schaik (1294563) 86 Indonesia’s Education Policy

The correlation matrix (table D.1 shows some variables correlate, but is dif- ficult to analyze the relation from this matrix. A factor analysis is done to reduce the number of variables. First the variables are screened. The variable Age is dropped. Different school classes were surveyed at different schools (which cater different age categories). This variable could be relevant if the average age is significantly higher at the non elite schools (SMA Taman Madya and SMP Kalam Kudus). However the boxplots in figure D.2 shows no big differences between similar classes on the different schools, therefore Age is dropped. Table D.3 shows the communalities of the variables.

Figure D.2: Age distribution per class Figure D.3: Communalities and school

Table D.4 shows the components from the factor analysis and how much of the variance in the data these components explain. The five biggest com- ponents together explain 61% of the total variance.

The scree plot (figure D.5 does not show a clear ”knee” after which the components no longer significantly contribute to explaining the variance in the data. After the first five components the eigenvalue drops below zero and this is taken as the selection criteria. Table D.6 shows the component matrix and table D.7 the component matrix after rotation. The components are easier to interpret after rotation.

The load of the factors on the components changed after rotation, which makes the components easier to probably easier to interpret. Based on the factor loads shown in the rotated component matrix, the following names are given to the five components: 1. Transport (transport costs, mode of transport, travel time)

Msc Thesis, B. van Schaik (1294563) 87 Indonesia’s Education Policy

Figure D.4: Total variance explained

Figure D.5: Scree plot

Msc Thesis, B. van Schaik (1294563) 88 Indonesia’s Education Policy

Figure D.6: Component matrix

2. Achievements (entrance difficult, grade, dropout) 3. Money (allowance, able to pay costs) 4. School type (changed school, school) 5. Lessons (Extra lessons, costs lessons)

Msc Thesis, B. van Schaik (1294563) 89 Indonesia’s Education Policy

Figure D.7: Rotated component matrix

A scatter plot of two components might show a relation between two components. A matrix of scatter plots is show in figure D.8. The scatter plot in figure D.9 shows a linear relation between achievements and school type. It suggests the students achievements depend on the type of school he or she enters.

Msc Thesis, B. van Schaik (1294563) 90 Indonesia’s Education Policy

Figure D.8: Scatter plot matrix of com- Figure D.9: Scatter plot of Achieve- ponents ments and School type

Msc Thesis, B. van Schaik (1294563) 91 E. Letters of Reference

92 Indonesia’s Education Policy

Msc Thesis, B. van Schaik (1294563) 93 Indonesia’s Education Policy

Msc Thesis, B. van Schaik (1294563) 94 Indonesia’s Education Policy

Msc Thesis, B. van Schaik (1294563) 95 F. Coded List of Sources

This appendix contains a description of the sources referenced in this thesis. These sources were all personally interviewed (some several times) by the researcher. Although Indonesia enjoys free press, saying in public what you think can lead to repercussions by persons, firms or institutions that don’t agree. For this reasons the sources are referenced by a letter and their identity is only disclosed in this appendix. Note that this appendix is not available in the public version of this thesis.

96 References

(n.d.). Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. The American Economic Review, 91 (5), 1369–1401. Alatas, V. (2007). How many poor in indonesia? Tempo Magazine, VII (20). Banerjee, A. V., & Duflo, E. (2004). Growth theory through the lens of devel- opment economics (Tech. Rep.). Massachusetts Institute of Technology, Department of Economics. (Working Paper 05-01) Barrett, C. B. (2007). Development economics: An overview. Routledge. Barro, R. J., & Lee, J.-W. (1993). International comparisons of educational attainment. Journal of monetary economics, 32 (3), 363–394. Barro, R. J., & Lee, J.-W. (1996). International measures of schooling years and schooling quality. The American economic review, 86 (2), 218–223. Bils, M., & Klenow, P. J. (2000). Does schooling cause growth? The American Economic Review, 90 (5), 1160–1183. Bjork, C. (2004). Decentralisation in education, institutional culture and teacher autonomy in indonesia. International Review of Education, 50 (3), 245–262. Canton, E. (2007). Social returns to education: Macro-evidence. De Economist, 155 (4), 449–468. Carlsson, B., Jacobsson, S., Holmen, M., & Rickne, A. (2002). Innovation systems: analytical and methodological issues. Research Policy(1), 233–245. Chang, H.-J. (2007). Bad samaritans - the guilty secrets of rich nations & the threat to global prosperity (1 ed.). Random House Business Books. CIA. (2008). World fact book. United States Central Intelligence Agency. (URL: https://www.cia.gov/library/publications/the-world- factbook/) Dawkins, R. (1976). The selfish gene. Oxford University Press. Deininger, K. (2003). Does cost of schooling affect enrollment by the poor? universal primary education in uganda. Economics of education review,

97 Indonesia’s Education Policy

22, 291–305. Diamond, J. (1997). Guns, germs and steel. W.W. Norton. Dollar, D., & Kraay, A. (2004). Trade, growth and poverty. Economic Journal, 114 (493), F22–F49. Duflo, E. (2001). Schooling and labor market consequences of school con- struction in indonesia: Evidence from an unusual policy experiment. The American Economic Review, 91 (4), 796–813. Economist, T. (2006, 14 September). Poverty in in- donesia; always with them. The Economist. (URL: http://www.economist.com/world/asia/displaystory.cfm?storyid = 7925064) Gifford, R. (2007). China road: A journey into the future of a rising power. Random House. Glewwe, P. (2002). Schools and skills in developing countries: education policies and socioeconomic outcomes. Journal of Economic Literature, 436–482. Gordon, R. G. (2006). Ethnologue: Languages of the world (15 ed.). SIL International. (URL: http://www.ethnologue.com) Hanushek, E. A. (2005). The economics of school quality. German Economic Review, 6 (3), 269–286. Harford, T. (2006). The undercover economist. Little, Brown. Harford, T. (2008). The logic of life. Little Brown. Hartungi, R. (2006). Could developing countries take the benefit of globali- sation? International Journal of Social Economics, 33 (11), 728–743. Haryanto. (2001). Indonesian regional economic development: A neoclassical growth analysis. Majalah Perencaan Pembangunan(24). Jakarta Post. (2008a). Candidate commits suicide after poll upset. The Jakarta Post. (15 April 2008) Jakarta Post. (2008b). Govt to raise spending on education next year. The Jakarta Post. (15 August 2008) Jakarta Post. (2008c). Netherlands grants $20 million for education. The Jakarta Post. (15 December 2008) Jamison, E. A., Jamison, D. T., & Hanushek, E. A. (2007). The effects of education quality on income growth and mortality decline. Economics of Education Review, 26, 772–789. Kay, J. (2003, 12 November). When natural resources are a curse. Financial Times. Kay, J. (2004). The truth about markets. Penguin Books. Kim, S.-J., & Kim, Y. J. (1999). Growth gains from trade and education (Tech. Rep. No. WP/99/23). International Monetary Fund. Kingdon, G., & Theopold, N. (2007). Do returns to education matter to

Msc Thesis, B. van Schaik (1294563) 98 Indonesia’s Education Policy

schooling participation? evidence from india (Tech. Rep.). Global Poverty Research Group. Kingsbury, D. (2002). The politics of indonesia. Oxford University Press. Knight, J., Shi, L., & Quheng, D. (2008). Education and the poverty trap in rural china (Tech. Rep. No. CSAE WPS/2008-02). Center for the study of African economies, Oxford University. Kristiansen, S., Wahid, F., & Furuholt, B. (2006). Investing in knowledge? information asymmerty and indonesian schooling. The International Information and Library Review, 38, 192–204. Krueger, A. B., & Lindahl, M. (2001). Does schooling cause growth? Journal of Economic Literature, XXXIX, 1101–1136. Levitt, S. D., & Dubner, S. J. (2005). Freakonomics. William Morrow. Lijphart, A. (1999). Patterns of democracy: Government forms and perfor- mance in thirty-six countries. Yale Univeristy Press. Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107 (2), 407–437. Ministry of National Education. (2008). Strategic plan 2005-2009. The Ministry of National Education, Republic of Indonesia. (URL: http://www.depdiknas.go.id) Ministry of Research and Technology. (2008). Vision and mission 2025. The Ministry of Research and Technology, Republic of Indonesia. (URL: http://www.ristek.go.id/english/home.html) Pavitt, K. (2001). Public policies to support basic research: What can the rest of the world learn from us theory and practice? (and what they should not learn). Industrial and Corporate Change, 10 (3), 761–779. Resosudarmo, B., & Vidyattama, Y. (2006). Regional income disparity in indonesia: A panel data analysis. ASEAN Economic bulletin, 23 (1), 31–44. Robertson-Snape, F. (1999). Corruption, collusion and nepotism in indone- sia. Third World Quarterly, 20 (3), 589–602. Romer, P. M. (1990). Endogenous technological growth. The Journal of Political Economy, 98 (5), S71–S102. Sachs, J. D. (2005). The end of poverty. Penguin Books. Sachs, J. D., & Warner, A. M. (1995). Natural resource abundance and economic growth (Tech. Rep.). Harvard University, Institute for Inter- national Development. (Development Discussion Paper No. 517a) Samuelson, P. A. (1954). The pure theory of public expenditure. Review of Economics and Statistics, 36 (4), 387–389. Sena, V. (2004). The return of the prince of denmark:a survey on recent devel-

Msc Thesis, B. van Schaik (1294563) 99 Indonesia’s Education Policy

opments in the economics of innovation. The Economic Journal(114), F312–F332. Shapira, P., Youtie, J., Yogeesvaran, K., & Jaafar, Z. (2006). Knowl- edge economy measurement: Methods,results and insights from the malaysian knowledge content study. Research Policy, 35, 1522–1537. Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70 (1), 65–94. Stiglitz, J. E. (2002a). Globalism’s discontents. American Prospect, 13 (1). Stiglitz, J. E. (2002b). Globalization and its discontents. Penguin books. Summers, R. M., & Heston, A. (1988). A new set of international comparisons of real product and price level estimates for 130 countries, 1950-85. Review of income and wealth, XXXIV, 1–26. Svensson, J., & Reinikka, R. (2005). Fighting corruption to improve school- ing: evidence from a newspaper campaign in uganda. Journal of the European economic association, 3 (2-3), 259–267. Talen, E. (2001). School, community, and spatial equity: An empirical investigation of access to elementary schools in west virginia. Annals of the Association of American Geographers, 91 (3), 465–486. Thomas, D., Frankenberg, E., Friedman, J., Habicht, J.-P., Hakimi, M., Jaswadi, et al. (2003). Iron deficiency and the well-being of older adults: Early results from a randomized nutrition intervention. Mimeo. Wong, P.-K., Ho, Y.-P., & Singh, A. (2007). Towards an ’entrepreneurial university’ model to support knowledge-based economic development: The case of the national university of singapore. World Development, 35 (6), 941–958. Yin, R. K. (2003). Case study research - design and methods volume 5 (3 ed.). Sage Publications.

Msc Thesis, B. van Schaik (1294563) 100