Ideas in Action: LPEM, the Think Tank that did not Just Think

This article examines the role of the Institute for Economic and Social Research (LPEM) at the University of Indonesia as a university-based think tank operating at the boundary between academic research and economic policy-making. Using a conceptual framework on think tanks and epistemic communities, and drawing on two case studies—fuel subsidy reform in 2005 and investment climate reform in the early 2000s—the article traces how LPEM has influenced policy debates and reform trajectories in Indonesia. We show that LPEM’s influence has not rested on formal authority or ideological advocacy, but on its capacity to translate empirical analysis into policy-relevant arguments, often through close engagement with state actors. The article argues that LPEM’s approach reflects a pragmatic ‘political economy of the possible’, shaped by institutional constraints and shifting policy environments rather than fixed doctrine. The findings contribute to the literature on think tanks by highlighting how university-based institutions in developing countries can shape policy through credibility, continuity and sustained engagement.