Reform in an Imperfect World: the Case of Indonesia

Author: Muhammad Chatib Basri

Almost all economic policy recommendations cite the importance of economic reform; and it should be noted that economic reform has brought signicant economic change to several countries, as it has in Southeast Asia. In Indonesia, for example, economic reforms undertaken in the mid-1960s and mid-1980s succeeded in increasing economic growth, improving prosperity and welfare, and reducing poverty levels. Similar results can be found in Vietnam, the Philippines, Singapore, and other Southeast Asian nations.
While economic reform is considered solution to economic woes, the fact is that it is
often difcult to implement. Economic theory provides the theoretical framework to explain
why reform must be undertaken and how it impacts the economy. But economic theory
does not provide much advice on how it should be implemented, nor any practical guidance on how to ensure that reforms are workable and successful, especially within the framework of political constraints or in less well-established institutions (Hill 2013).
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