After 15 years, it’s time to judge the performance of reform era. Having toppled Pak Harto in 1998, this era ushered in democracy and offered sweet dreams. The New Order which traded development for democracy and freedom was deemed to have failed. The New Order itself was the antithesis of The Old Order. The New Order relied the development on high-skilled foreign-educated technocrats, whereas The Old Older on politicians. The Reform Era is déjà vu where the politicians attain power and politics is put in command, again.
However in 1998, on paper Indonesia was not ready for democracy. According to Fareed Zakaria, American thinker, functioning democracy requires strong middle class and institution. Middle class who create wealth on their own want to preserve their wealth and freedom by rule of law. To ascertain their interest is accommodated, they must have representatives chosen through election. Thus, strong and reliable institution is needed to regulate this free society. The institution is largely financed by middle class’ pay tax. This is the logic of democracy.
Even up until now Indonesia is still lack of those prerequisites. The RI’s income per capita is still below USD 6,000 to emerge strong middle class and the political system failed to create effective institution. Unsurprisingly, all achievements under The Reform Era are questionable.
Let’s see economic growth as the most reference to the success of The Reform Era. Actually, Indonesia registers success by maintaining 4-6% growth for years, even amid world’s economic crisis. Unfortunately, this impressing economic growth has the downside. It turns out not to be distributed fairly. During the Reform Era, Gini ratio rises from 0.38 to 0.41 showing strong inequality. It is partly because the economic growth is not driven by tradeable sector (especially manufacturing industry) which was the hallmark of the success of the New Order. The growth of manufacturing, as the time tested path to become developed country, is retarded.
Human Development Index (HDI) is the better way to describe prosperity and thus better way to judge the performance of the Reform Era. It not only measures income as the representation of economic growth, but combines it with health status and education performance. During the Reform Era, in fact HDI is increasing, yet it’s slow and still lags behind Thailand and the Philippines, let alone Malaysia and Singapore which have already attained high and very high human development, respectively. In 2012 Indonesia ranked 121 out of 187 countries and in medium human development bracket. The gap between Indonesia and its peer in East Asia and the Pacific is relatively widening. So, the vaunted economic growth doesn’t necessarily mean prosperity.
The HDI achievement brings us to look back at the prerequisite of successful democracy. The culprit why the HDI stubbornly doesn’t move up fast is the failure to establish good institution/government/system. Data and study show that human development is inextricably link with institution development.
The Worldwide Governance Indicators (WGI) data can shed light on institution development. WGI measures 6 indicators which relate to good governance among countries, namely: (1) voice and accountability, (2) political stability and absence of violence, (3) government effectiveness, (4) regulatory quality, (5) rule of law, and (6) control of corruption.
As mentioned before, Singapore and Malaysia which have achieved high human development status score much higher in nearly all WGI’s indicators than those of Indonesia. And Mattias Ottervik has winnowed down the most powerful indicator. He wrote a paper on “Good” Governance and Human Development, The Case of China and India (2011) and concluded that of WGI’s 6 indicators, “government effectiveness” has the largest impact on human development.
During the Reform Era, in all WGI’s indicators, RI hasn’t performed well. RI has made only little progress in government effectiveness, but declined in regulatory quality and rule of law compared those of the New Order Era in 1996.
As predicted in theory, RI’s democracy can’t establish reliable institutions replacing the New Order’s strong and centralized ones which, to some extent, really worked well. Politicians can’t make a big difference in development. Decentralization creates no comprehensive and effective national policy. The power of executives is so weak that can’t enact rule of law. High political costs with too much elections cause rampant corruption and collusion.
Certainly, the Reform Era is still the work in progress. So we keep examining what works and what doesn’t. Democracy is ideal, but, at the end of the day, people want democracy juxtaposed with prosperity more.
Even up until now Indonesia is still lack of those prerequisites. The RI’s income per capita is still below USD 6,000 to emerge strong middle class and the political system failed to create effective institution. Unsurprisingly, all achievements under The Reform Era are questionable.
Let’s see economic growth as the most reference to the success of The Reform Era. Actually, Indonesia registers success by maintaining 4-6% growth for years, even amid world’s economic crisis. Unfortunately, this impressing economic growth has the downside. It turns out not to be distributed fairly. During the Reform Era, Gini ratio rises from 0.38 to 0.41 showing strong inequality. It is partly because the economic growth is not driven by tradeable sector (especially manufacturing industry) which was the hallmark of the success of the New Order. The growth of manufacturing, as the time tested path to become developed country, is retarded.
Human Development Index (HDI) is the better way to describe prosperity and thus better way to judge the performance of the Reform Era. It not only measures income as the representation of economic growth, but combines it with health status and education performance. During the Reform Era, in fact HDI is increasing, yet it’s slow and still lags behind Thailand and the Philippines, let alone Malaysia and Singapore which have already attained high and very high human development, respectively. In 2012 Indonesia ranked 121 out of 187 countries and in medium human development bracket. The gap between Indonesia and its peer in East Asia and the Pacific is relatively widening. So, the vaunted economic growth doesn’t necessarily mean prosperity.
The HDI achievement brings us to look back at the prerequisite of successful democracy. The culprit why the HDI stubbornly doesn’t move up fast is the failure to establish good institution/government/system. Data and study show that human development is inextricably link with institution development.
The Worldwide Governance Indicators (WGI) data can shed light on institution development. WGI measures 6 indicators which relate to good governance among countries, namely: (1) voice and accountability, (2) political stability and absence of violence, (3) government effectiveness, (4) regulatory quality, (5) rule of law, and (6) control of corruption.
As mentioned before, Singapore and Malaysia which have achieved high human development status score much higher in nearly all WGI’s indicators than those of Indonesia. And Mattias Ottervik has winnowed down the most powerful indicator. He wrote a paper on “Good” Governance and Human Development, The Case of China and India (2011) and concluded that of WGI’s 6 indicators, “government effectiveness” has the largest impact on human development.
During the Reform Era, in all WGI’s indicators, RI hasn’t performed well. RI has made only little progress in government effectiveness, but declined in regulatory quality and rule of law compared those of the New Order Era in 1996.
As predicted in theory, RI’s democracy can’t establish reliable institutions replacing the New Order’s strong and centralized ones which, to some extent, really worked well. Politicians can’t make a big difference in development. Decentralization creates no comprehensive and effective national policy. The power of executives is so weak that can’t enact rule of law. High political costs with too much elections cause rampant corruption and collusion.
Certainly, the Reform Era is still the work in progress. So we keep examining what works and what doesn’t. Democracy is ideal, but, at the end of the day, people want democracy juxtaposed with prosperity more.
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