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Private Sector Lessons for Public Sector Reform in Indonesia


  • Ross H. McLeod



Development economists often analyse the performance of particular sectors of the economy, yet they have largely ignored that of one of the most important sectors, namely, the public sector, the performance of which is demonstrably poor. They are also continually giving recommendations to the Indonesian government as to what constitutes sound economic policy, whereas there is abundant evidence that the bureaucracy has neither the incentive nor the competence to implement such policy. Civil service reform is therefore crucial to improving Indonesia's economic performance. This paper argues that the key to such reform is the adoption of human resource management practices similar to those that can be observed in successful, large business enterprises: namely, creating an environment of open and fair competition for all positions within the organisation.

Suggested Citation

  • Ross H. McLeod, 2005. "Private Sector Lessons for Public Sector Reform in Indonesia," Departmental Working Papers 2006-02, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2006-02

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    References listed on IDEAS

    1. Ross Mcleod, 2006. "Indonesia's new deposit guarantee law," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(1), pages 59-78.
    2. Jan ter Wengel & Edgard Rodriguez, 2006. "Productivity And Firm Dynamics: Creative Destruction In Indonesian Manufacturing, 1994-2000," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(3), pages 341-355.
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    Cited by:

    1. Krisztina Kis-Katos & G√ľnther G. Schulze, 2013. "Corruption in Southeast Asia: a survey of recent research," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(1), pages 79-109, May.

    More about this item


    civil service reform; human resource management; performance evaluation; competition; incentives;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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