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After Soeharto: Prospects for reform and recovery in Indonesia

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  • Ross H McLeod

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Abstract

With Soeharto's demise, Indonesia gained democracy but lost effective government. The economy has been slow to recover from the crisis, and even modest growth of around 3-4% may not be able to be maintained: neither stagnation nor decline is out of the question. It is therefore urgent to overhaul Indonesia's public sector institutions, which had been co-opted by Soeharto into his economy-wide 'franchise' - a system of government devoted to the objective of redistributing income and wealth from the weak to the strong while simultaneously maintaining rapid growth. This franchise has disintegrated in the absence of a clear 'owner', with its various component parts now working at cross purposes rather than in mutually reinforcing fashion. The result has been a significant decline in the security of property rights and the postponement of a convincing economic rebound. To reform the public sector institutions it will be necessary to undertake a radical overhaul of personnel management practices and salary structures, with the objective of providing strong incentives for officials to work in the public interest. The prospects for such reform, however, seem slight.

Suggested Citation

  • Ross H McLeod, 2003. "After Soeharto: Prospects for reform and recovery in Indonesia," Departmental Working Papers 2003-10, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2003-10
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2003/wp-econ-2003-10.pdf
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    References listed on IDEAS

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    1. Deon Filmer & David Lindauer, 2001. "Does Indonesia Have A 'Low Pay' Civil Service?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(2), pages 189-205.
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    3. Mari Pangestu & Miranda Swaray Goeltom, 2001. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(2), pages 141-171.
    4. Paul Deuster, 2002. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(1), pages 5-37.
    5. Emil Salim, 1997. "Recollections of My Career," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 33(1), pages 45-74.
    6. Reza Siregar, 2001. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(3), pages 277-303.
    7. Lisa Cameron, 1999. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(1), pages 3-41.
    8. Stephen Sherlock, 2002. "Combating Corruption in Indonesia? The Ombudsman and the Assets Auditing Commission," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(3), pages 367-383.
    9. Howard Dick, 2001. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(1), pages 7-41.
    10. Steven Tolliday (ed.), 1991. "Government And Business," Books, Edward Elgar Publishing, number 521.
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    Cited by:

    1. Budy Resosudarmo & Ari Kuncoro, 2006. "The Political Economy of Indonesian Economic Reforms: 1983-2000," Oxford Development Studies, Taylor & Francis Journals, vol. 34(3), pages 341-355.

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    Keywords

    reform; recovery; franchise; property rights; democracy; incentives.;

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