Community-Based Targeting and Initial Local Conditions: Evidence from Indonesia's IDT Program

The article offers evidence on the relationship between targeting performance and a rich array of preprogram community conditions like the levels of poverty and inequality, density, characteristics of local leaders and local government, and the availability of infrastructure. The positive association between inequality and targeting might reflect Indonesia's political context, where village heads had incentives to follow the national guidelines to target the poor. Relatively limited evidence is available for the relationship between targeting and the characteristics of local leaders. Related studies indicate that it is important to monitor or regulate the actions of those leaders. The availability of nationally representative data and the explicit formula-based village selection rule have attracted many researchers to investigate the intervillage distribution of IDT funds. The household-level analysis suggests a similar pattern for unequal villages as well. The decline in targeting occurred partly because the successful performance, associated with young, educated village heads, did not last.