RI’s Institution Development

The Indonesians hail Jokowi’s leadership style and by leading the poll he is tipped for 2014 presidency. His exemplary management which relies heavily on direct observation to the problems and solved them right away impresses people and gets so much credit. Is his approach good enough to bring prosperity to the Indonesians?

Let us scrutinize the origin of nation’s prosperity theory. Recently, debates pop up about what makes countries great what makes them fail. Great nations and civilization rose and faded away. The Romans, Mayas, Chinese, Egyptians are cases in point. And some nations have never stepped up to the modern civilization.

One convincing explanation about this is coming from Jared Diamond, American anthropologist, evolutionary biologist. He put forward that geography, the lay of land, matters. The first civilization was born in the Fertile Crescent, in near east area, and obviously not in Papua New Guinea. The rise of the first civilization is simply because of geography. The Fertile Crescent is blessed with the plants and animals which later can be domesticated such as wheat, barley, horse, cow, pig, etc. It was them who were the first to have settled in organized community and farmed. From this area, civilization spread out. Thanks to geography, the continent of Asia and Europe are so well connected each other that the ideas can be spread out and improved. In contrast, America’s great civilization Aztec and Inca are relatively isolated. The difference of development caused Spain’s conquistadors, Hernando Cortez and Fransisco Pizzaro with horses and superior technology of guns and steel easily conquered Aztec and Inca in sixteen century, respectively, not the other way around. These facts really satisfy geography-determine-progress-of-nation theory.

However the theory might serve well in ancient times, not in modern times. One compelling case is the different prosperity between North Korea and South Korea. They shared the same geography, ancestor, culture and language, but North Korea is still grappling with abject poverty while South Korea has ascended to become developed nation. Two American economists, Daron Acemoglu and James A Robinson have better account for why nations succeed. It is not geography, but inclusive political and economic institutions do matter. Economic institution must ensure entrepreneurs have incentives to innovate and materialize the ideas. And the state must protect the property rights, create a level playing field and encourage investment in new technologies. Political institution must ascertain the distribution of power in a pluralistic manner and enforce the law. This is the recipe for success. The British is the first who developed the inclusive institutions. That’s why they ruled the waves and ignited the industry revolution. This inclusive institution later is adopted by her colony in United States, who is the first nation to hold modern democracy and later becomes world’s superpower. To some extent, institution development is the cogent theory to explain the success of nation’s development.

This brings us back to RI’s institutional development. No RI’s president has succeeded in developing inclusive institutional development. Having founded the first emerging independent nation after the Second World War, President Soekarno failed to establish adequate political and economic system. His era ended in chaos. President Soeharto (and President Habibie) once ostensibly managed to develop inclusive economic institution though massive efforts in agriculture, industry and technology sectors. For some time, they brought self-sufficiency in rice and soybean production, they expanded strategic industries including aircraft production. But the success is unsustainable and ephemeral.

Similar to Jokowi in 1970s, Bang Ali Sadikin was the most popular governor in Indonesia, he solved people’s problem and was also highly admired. But after Bang Ali stepped down, Jakarta went back to business as usual and lost its charm.

The lessons learned are before Jokowi, Indonesia had many capable leaders. They shared the same pattern: first they came with the new approach and were praised, then they delivered results in their peak performance, and at last they were out of steam and declined.

The Indonesians must not depend on the existence of “great leader” or never crave for the arrival of Ratu Adil (the Just King/Righteous Prince). It’s better to ask for the development inclusive institutions which can be run regardless the leaders in charge. Leaders come and go, but the good institution stay. Some said United States is the nation designed by geniuses, so it can be run by idiots.

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