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Economic Crisis, Institutional Changes and the Effectiveness of Government : the Case of Indonesia

Author

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  • Ari Perdana

    (CSIS)

  • Deni Friawan

Abstract

Ten years after the crisis, Indonesia is still struggling to solve the problems in four major issues : economic stabilization and recovery, democratic transition and political reform, decentralization of political power, and the redefinition of national identity. This paper will explain the major changes in the political sphere, and how they affect the effectiveness of government in delivering economic recovery. This paper argues that democratic transition and decentralization affects economic recovery through the quality and effectiveness of governance. These changes have had mixed results in the economic policymaking. On the one hand the new system provides more check-and-balance mechanisms. On the other hand, it delays the decision-making process and creates new patterns of rent-seeking activities. This paper discusses these changes in two main parts. First, it quantitatively evaluates the impact of this transformation on the quality of institution and government effectiveness using the available and widely used Governance Indicators. Second, it provides a qualitative description on the process and outcomes of the political transformation.

Suggested Citation

  • Ari Perdana & Deni Friawan, 2007. "Economic Crisis, Institutional Changes and the Effectiveness of Government : the Case of Indonesia," Governance Working Papers 21905, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:govern:21905
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    File URL: http://www.eaber.org/node/21905
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    References listed on IDEAS

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    1. Blane Lewis, 2006. "Local government taxation: An analysis of administrative cost inefficiency," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(2), pages 213-233.
    2. James Alm & Robert Aten & Roy Bahl, 2001. "Can Indonesia Decentralise Successfully? Plans, Problems And Prospects," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(1), pages 83-102.
    3. J. Vernon Henderson & Ari Kuncoro, 2004. "Corruption in Indonesia," NBER Working Papers 10674, National Bureau of Economic Research, Inc.
    4. 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.
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    Cited by:

    1. Sadayuki Takii & Eric Ramstetter, 2007. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 43(3), pages 295-322.

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