The 1997-1998 globalization effects in Indonesia
“In 1998 20% of the Indonesian population were below the poverty line. In 1999, 28% of the population was below the poverty line. Then in 2000, 22% of the population was below the poverty line” (Rukmana).
The International Monetary Fund (IMF) claims to help countries in poverty achieve macroeconomic stability to reduce poverty. Macroeconomic stability is the balance of healthy rates of: GDP, unemployment, and price indices (Gupya). Indonesia sought the aid of the IMF after their devastating finical crisis in 1998. Indonesia had a reported 700 million people in extreme poverty in 1998 (White Pages). Not only did the poverty rate increase after receiving aid from the IMF, but also more importantly the merciless loan agreements from their emergency bailout package truly demolished the Indonesian economy. Many experts speculate that the IMF only aim is to impoverish countries desperate for aid and enrich foreign investors. In 1997 the Indonesian economy collapsed, the Indonesian economic growth dropped by 14% and this was an apocalyptic point for the Indonesian economy (Radelet). In the same year the Thai, Korean and the Philippine economies collapsed as well. Once the Indonesia economy had collapsed under reign of the dictator General Suharto, the IMF proposed a bailout loan in the amount of 43 billion dollars (Socialist Worker). Indonesia accepted the offer to offset their debt. The emergency bailout package terms required a cut of all subsidies that were being provided and a reconstruction of the Indonesian banking system. Indonesia also felt the pressure from foreign investors to open sweatshops and low cost factories. This further increased the frustration of the Indonesian people against their government and the non-governmental organizations (NGO’s) that supported them. The first loan agreement from the emergency bailout package that devastated the Indonesia economy was cutting all subsidies for the...
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