The Strategy of Indonesia’s Economic Transformation

Arndt (1978, p. 28): There is hardly an economic policy – whether for the levying of income tax or an urban real estate tax, or for tariff protection of domestic industry, or for subsidies to depressed industries, or for minimal regulation of foreign investment or of road traffic, or for conservation of forests or for provision of rural credit to farmers or for priorities in investment credit by state banks, or for social welfare services or development projects of every kind – which, whatever its economic or technical merits, does not now need to be weighed – and often ruled out – almost wholly on grounds of its administrative impracticability in the face of corruption.’ Boediono (2005, p. 323) on lessons learnt:‘Beware of possible disharmony between politics and economics … Never take economic stability for granted. … Institutions and governance should receive the highest priority in the overall strategy.’ Harberger (1984, p. 427):'... there is no magic formula [for economic growth] – no combination of one or two or even ten or twelve policy buttons that, once pushed in the right order, will guarantee economic growth.' Higgins (1968, p. 678): A ‘chronic dropout, … Indonesia must surely be accounted the number one failure among the major underdeveloped countries.’(Attributed to) Harry Johnson:‘The theory of the second best may be all very well in theory, but it’s often devised by third best economists and implemented by fourth best bureaucrats.’Journal: Economics and Finance in Indonesia Keynes: ‘It is better to be roughly right than precisely wrong.’ Lee Kuan Yew (2006): ‘They (Indonesian policy makers) know that their labour laws are driving away investors. But the moment the government proposes an amendment, the unions riot. Why? I think they haven’t understood what the world is. They think, “This is my minimum wage; you have to do this, you have to do that.” Meanwhile, there’s massive unemployment and no investments.’ (quoted in the AFR, May 17, 2006)Political economy 101 (courtesy of Chatib Basri): ‘Governments may not be very good at picking winners, but losers are good at picking governments.’ Timmer (1973, p. 76):‘”Getting prices right” is not the end of economic development. But “getting prices wrong” frequently is.’