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Of the developing nations of East Asia, Indonesia came relatively late to liberalizing its trade and investment regime. Only in the mid-1980s, when it was clear that oil revenues alone would not suffice and that a new engine of growth was needed, did the country's government swing behind a systematic deregulation effort. Tariffs were cut, non-tariff barriers were lowered, foreign investment restrictions were reduced, export promotion incentives were enhanced, and various financial sector regulations were eased. All this combined to spark a labor-intensive export-led economic boom that was accompanied by an expansion in wages and employment and a boost in productivity. This book documents how Indonesia truly became part of the East Asian miracle story starting in the mid-1980s. Destined to become a leading case study of export-led development in Indonesia, this book grew out of a World Bank/Indonesian Economic Society Symposium held in Jakarta.
There was, however, a parallel story as well, of crony capitalism and weak governance, that led to the financial and political crisis of 1997-98. These aspects were reflected in continued protection of certain sectors where the cronies were active, in restrictions on domestic trade and competition that were left in place for their benefit, and in financial manipulations that were conducted to their advantage. These aspects are noted as well in the book and pulled together in the concluding chapter, which takes the story up through the crisis years to the present.
List of contents
Deregulation and Development in Indonesia: An Introductory Overview by Farrukh Iqbal and Faham Rashid
The Evolution of Economic Policy Reforms: Determinants, Sequencing, and Reasons for Success by William James and Sherry Stephenson
Foreign Investment Policy: Evolution and Characteristics by Mari Pangestu
The Rise in Total Factor Productivity During Deregulation, 1985-1992 by Dipak Dasgupta, Edison Hulu, and James Hanson
The Determinants of Indonesia's Non-oil Exports by Dipak Dasgupta, Edison Hulu, and Bejoy Das Gupta
The Impact of Deregulation on the Manufacturing Sector by Farrukh Iqbal
The Impact of Liberalization on Employment and Earnings by Nisha Agrawal
Sulawesi's Cocoa Boom: Lessons of Small-holder Dynamism and Hands-off Policy by Akihiko Nishio and Takamasa Akiyama
Costs and Benefits of Soymeal Deregulation, 1991-1994 by Jacqueline L. Pomeroy
The Indonesian Cement Industry: A Case for Modified Regulation by Herb Plunkett and Anwar Pasinringi
Distributional Impact of Government Policies in the Sugar Sector by Martin P.H. Panggabean
The Impact of Regional Trade Liberalization on Selected APEC Countries and Indonesia by Jeffrey D. Lewis and Sherman Robinson
Economic Reforms During the Crisis and Beyond by William James and Anwar Nasution
About the author
FARRUKH IQBAL is Lead Economist and Regional Coordinator for East Asia at the World Bank Institute.
WILLIAM E. JAMES is Chief of the Research Division and Research Professor of the International Centre for the Study of East Asian Development, based in Japan.
