The objective of this paper is to present a multiplier decomposition method focusing on
poverty alleviation. The decomposition captures the various mechanisms and linkages
through which a production sector's output contributes to poverty alleviation within a
socioeconomic system represented by a Social Accounting Matrix (SAM). It is shown that a
multiplier can be broken down into two multiplicative effects, the distributional and
interdependency effects. The decomposition method is applied to the case of Indonesia. A
key policy implication is that the human capital of the poor needs to be enhanced if they are
not to be sealed off from the industrialization process.