`Eclectic approach solution for world's dynamic economy'
`Eclectic approach solution for world's dynamic economy'
JAKARTA (JP): Indonesia must adopt an eclectic approach in
determining macro-economic policy to face developments in the
dynamic world economy, economist Soedradjad Djiwandono argues.
Soedradjad, who is governor of Bank Indonesia (the central
bank) said, in an inauguration speech as a professor of economics
at the University of Indonesia, that the country has to apply an
effective approach to face ongoing problems.
Soedradjad believes that economic policy formulators need to
apply several feasible propositions or economic theories in
analyzing problems before integrating them into policy.
"We can not implement a single economic theory, even though it
is good, to determine policy because it may be ineffective when
the objective changes," Soedradjad said.
"But we can not frequently alter policies," he said, adding
that frequent changes would mislead Indonesia's economic policy.
Soedradjad stated that the world economy is facing rapid
structural changes with globalization in almost every sector.
He said globalization in finance, for example, has brought
about the tri-polarization of the world's monetary market between
the United States,the market leader, Europe and Japan.
Capital
Globalization in finance has also caused the rapid development
of capital markets in the world with a heavy flow of funds from
advanced countries into developing countries, he said.
He cited as an example the abundance of foreign funds entering
Indonesia during the second semester of last year.
Soedradjad said that in the production sector, globalization
has produced a multi-sourcing system, where components of certain
products are manufactured in different countries.
The manufacturing of clothes, where parts are produced in
three separate countries with materials from other countries, is
the often used example Soedradjad commented.
He said globalization in trade and multinational relationships
is best illustrated by the economic interdependence of every
country in the world, including advanced nations.
Soedradjad believes the United States, which was economically
independent in the early 1960s, is now dependent because it can
no longer match developing countries' comparative superiority in
mass production.
Soedradjad, 55, is the 14th lecturer to be promoted to
professor in the University of Indonesia's faculty of economics
this year. He is also the 132nd professor to be promoted by the
university thus far.
He graduated in economics from Gadjah Mada University in
Yogyakarta in 1963 and got a masters degree in the United States.
He started teaching at the University of Indonesia in 1979 after
being transferred from the Indonesian Institute of Science.
He was a junior trade minister before being appointed as the
governor of the central bank last year.(02)