Living standards — practice question

Background material: Indonesia and climate change Indonesia fact file (2021) Indonesia GDP: $1100bn Indonesia economic growth rate: 3.7% Jakarta GDP: $300bn Jakarta economic growth rate: 2.4% From 1945 until 2024, Jakarta served as Indonesia’s capital city, and it is among the fastest-sinking and most polluted cities in the world. A sharp drop in real Gross Domestic Product (GDP) per head is forecast for the city, which may bring about a decline in living standards. The free market can be held responsible for air pollution and rising sea levels in parts of Indonesia. Schools and other buildings have been flooded and roads have been damaged. Floods have also caused a rise in diseases spread by water and mosquitoes that breed in water. Farmland has gone underwater, removing an important income source for many farmers. As a result, internal migration (people moving between regions of the same country) has taken place. For instance, some farmers have relocated to places where climate change has made it possible to grow different crops. Regions that people have left have faced less pressure on both natural resources and local government resources. Even so, such movements could cause whole communities to break down and widen inequality between workers who can move more easily and those who cannot. Governments across the world have responded to climate change by increasing spending on the environment. Table 1.1 gives the GDP and environmental government spending of selected countries in 2019. Table 1.1 GDP and government spending on the environment of selected countries in 2019: France - GDP $2730bn, government spending on the environment $27.03bn Indonesia - GDP $1120bn, government spending on the environment $2.58bn Japan - GDP $5150bn, government spending on the environment $58.20bn Switzerland - GDP $730bn, government spending on the environment $4.02bn Thailand - GDP $540bn, government spending on the environment $0.32bn The Indonesian government has also reacted to environmental concerns by moving its capital city. Nusantara is set to replace Jakarta as the capital in 2024. The new city is expected to cost $32.5 billion to build. Besides creating employment, this city could also lessen inequality between Indonesia’s different regions. Jakarta is on Java, which is a wealthier region than Kalimantan. Nusantara, the new capital, will be situated in the Kalimantan region. In addition, the government plans for the new capital to be carbon-neutral. However, critics of the project argue that the expense is excessive. They also say the scheme will favour only a small number of rich and influential people.