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671. The Rise and Fall of the Indonesian Economy

Author:
Joseph J. Stern
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The Indonesia crisis was particularly severe. What began as an economic crisis quickly evolved in to a political crisis. Most analysts failed to recognize the growing weaknesses of the economy and were caught by surprise. In part Indonesia's economic success over the period 1985 through 1997 and its records on policy reforms had persuaded many that, despite some obvious weaknesses, it would come through the Asian crisis with minimum damage. A closer analysis of the Indonesia's economic history shows that the initial reforms, carefully crafted by a highly respected group of economic technocrats, tackled many of the most serious distortions that held back economic growth. But as these reforms began to pay off in terms of higher growth rates, sharply declining poverty rates, and an increased level of integration in the global economy, the desire for further reforms waned. Over time the beneficiaries of the early reforms allied themselves with the political elites to block further reforms and in effect reduced the power of the technocrats to resist a return to the dirigiste tendencies that had marked much of Indonesia's early development efforts. While the reforms were important, in retrospect they were insufficient to create an institutional infrastructure that could weather a dramatic economic downturn.
Topic:
Corruption, Economics, Poverty, Financial Crisis, Reform, and Economic Policy
Political Geography:
Indonesia and Southeast Asia

672. Political Institutions and Economic Policies: Lessons from Africa

Author:
Macartan Humphreys and Robert H. Bates
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Scholars, activists, and policy makers have argued that the route to economic growth in Africa runs through political reform. In particular, they prescribe electoral accountability as a step toward economic reform, seeing it as inducing the choice of publicly beneficial as opposed to privately profitable economic policies. To assess the validity of such arguments, we first characterize a set of political institutions that render political elites accountable and derive their expected impact on the policy choices of governments. Using ratings of macro-economic policy produced by the World Bank and ratings of corrupt practices produced for private investors, we explore the relationship between institutional forms and policy choices on both an African and global sample. While key elements of the model find empirical support, the central argument receives mixed support in the data. Political institutions have a stronger influence on policy making in Africa than elsewhere and variation in African institutions and in the structure of African economies account for differences between policy choices in Africa and those made in the rest of the world. Political accountability however does not influence the choice of macro-economic policies in the manner suggested by reformist arguments; although it does appear to lead to less political predation.
Topic:
Corruption, Political Economy, Elections, Economic Growth, and Institutions
Political Geography:
Africa

673. Peru: Yet Another Transition

Author:
Mark Falcoff
Publication Date:
03-2001
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Last November Peruvian politics were turned upside down by the revelation that the president’s security chief had been bribing members of congress, other prominent political personalities, and the media. The “smoking gun” was a series of filmed videos actually recording the shady transactions, involving millions of dollars in one of Latin America’s poorest nations. Popular indignation was so great that the president, Alberto Fujimori, diverted a flight to the Asia-Pacific conference in Brunei and went to Tokyo instead, where he precipitously claimed Japanese citizenship and asked for political asylum. At home, one of the strongest political machines in Latin America was dismantled almost overnight. Congress deposed the president, named an interim chief executive and prime minister, and called for new elections on April 8. Thus ends an era in Peruvian politics, one rich in paradox and moral ambiguity. What, one wonders, is next?
Topic:
Foreign Policy, Defense Policy, Corruption, and Politics
Political Geography:
Latin America and Peru

674. Argentina—Opposition

Publication Date:
11-1999
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
The outright victory of the Alliance candidate, Fernando de la Rua, on the first round of voting in the presidential elections on October 24, reflects the desire for a change of political style. De la Rua's approach to government will be less personalist and more consensual than that of the outgoing president, Carlos Menem. While economic policy is unlikely to change in any fundamental way, the new government will be under pressure to root out corruption. It will be the first time since the return to civilian rule in 1983 that a government lacks a majority in either chamber of Congress, which may strengthen democratic institutions.
Topic:
Corruption, Economics, and Government
Political Geography:
Argentina