Indonesia: the Troubled Giant
Indonesia: The Troubled Giant
Question 1: What political factors explain Indonesia's poor economic performance? What economic factors? Are these two related?
The impeachment of the Indonesian dictator Suharto is widely considered one of the most exciting political happenings of recent years. Indonesia is the world's fourth biggest country, with a population of 202 million people; Suharto had ruled the country with an iron fist for about 32 years. The fact that his absolute rule fell apart in just a few days shows the democracy holds when a country's people simply just get fed up. When they rose against Suharto, all of the institutions he had depended upon for all those years were not enough to keep him in power, and in the end the people of his country prevailed.
After dealing with inflation and a bad economic depression during the final years of the then President Sukarno in the early 1960s, Indonesia experienced rapid and lasting economic growth for three decades under the New Order government of President Suharto. The economic growth was followed by a severe decline in poverty, as it went from 40% of the population in 1976 to 11% in 1996. However, looking at only the New Order's economic accomplishments while ignoring its downfalls gives us an unfair view of that time era. The general view in Indonesia is that after the Asian economic crisis, the New Order brought economic ruin to the country.
The Indonesian economy crashed at the end of 1997. The rupiah, Indonesia's currency, lost 70% of its value. Indonesian banks were going out of business, overcome with debt, as they could not pay off their creditors in Japan, the U.S. and many other countries. Also, they could no longer afford to loan out money to the country's businesses, factories, or merchants. The factories had no choice but to begin firing off their employees, and to make matters worse, while the workers were losing their jobs, they were also facing
Question 1: What political factors explain Indonesia's poor economic performance? What economic factors? Are these two related?
The impeachment of the Indonesian dictator Suharto is widely considered one of the most exciting political happenings of recent years. Indonesia is the world's fourth biggest country, with a population of 202 million people; Suharto had ruled the country with an iron fist for about 32 years. The fact that his absolute rule fell apart in just a few days shows the democracy holds when a country's people simply just get fed up. When they rose against Suharto, all of the institutions he had depended upon for all those years were not enough to keep him in power, and in the end the people of his country prevailed.
After dealing with inflation and a bad economic depression during the final years of the then President Sukarno in the early 1960s, Indonesia experienced rapid and lasting economic growth for three decades under the New Order government of President Suharto. The economic growth was followed by a severe decline in poverty, as it went from 40% of the population in 1976 to 11% in 1996. However, looking at only the New Order's economic accomplishments while ignoring its downfalls gives us an unfair view of that time era. The general view in Indonesia is that after the Asian economic crisis, the New Order brought economic ruin to the country.
The Indonesian economy crashed at the end of 1997. The rupiah, Indonesia's currency, lost 70% of its value. Indonesian banks were going out of business, overcome with debt, as they could not pay off their creditors in Japan, the U.S. and many other countries. Also, they could no longer afford to loan out money to the country's businesses, factories, or merchants. The factories had no choice but to begin firing off their employees, and to make matters worse, while the workers were losing their jobs, they were also facing