JAKARTA (JP): Several preconditions must be established within a country before a sequence of policy reforms are implemented, regardless of the country's specific circumstances, a noted economist says.

William E. James, from the East-West Center in Hawaii, told the Third Biennial Conference of Asian Correspondent Institutes here Saturday that these preconditions have been achieved, to varying degrees, in Indonesia, Sri Lanka and India.

"Thus they could act as a lesson for other developing regions and for the former socialist economies," James said.

According to him, based on the experiences of these three developing countries, the necessary preconditions were political stability, successful macroeconomic stabilization and credibility of the reform process.

He said that only after the establishment of these essential factors could the sequential economic reforms be introduced.

James explained that despite several economic upheavals, mostly caused by fluctuations in oil prices, Indonesia followed the model quite nicely.

He said that macro-stabilization in Indonesia was established in 1967-1972, and was immediately followed by the removal of capital controls in 1972 when inward and outward capital flows were unrestricted.

He added that financial market liberalization succeeded these phases in 1983, and trade liberalization in 1986.

James emphasized Indonesia's distinctive political stability -- relative to Sri Lanka and India -- and the continuity of leadership for the past 25 years as the essential stable background for the implementation of economic reforms.

Essential

Meanwhile, Hakchung Choo from the Korea Development Institute in his presentation considered human resources development (HRD) to be an essential factor in influencing Asia's economic growth.

Choo told reporters at the end of the four-day conference that the high levels of growth and development achieved by Indonesia could provide lessons for the rest of Asia and the developing world.

"But Indonesia is a unique case because it is the first giant country to take off into sustained growth. This size factor is one of the overlooked challenges in economic development," he said, adding that other Asian "miracles", such as Singapore, South Korea, Taiwan, Malaysia and Thailand, were comparatively much smaller.

According to Choo, HRD tends to be neglected when designing and altering economic policies.

"This is mainly because it is difficult to make precise estimates of the impact of HRD on economic and social development. Apart from that, the relationship between HRD and economic growth is strong but not perfect or mono-causal," he said.

He stressed that certain actions were necessary to effectively utilize a country's human resources so that further investment in HRD would not increase educated unemployment but contribute to economic growth and social development.

The press conference was chaired by Hadi Soesastro from the Centre for Strategic and International Studies (CSIS) in Jakarta and attended by the General Director of the International Center for Economic Growth (ICEG) Nicolas Ardito-Barletta and distinguished persons from various institutes, including Sheiji Naya from ICEG, Huijion Wang from South Korea, S.P. Gupta from India, John Williamson from the U.S., and Andrew Mullei from Africa.

According to Barletta, who is Panama's former president, the conference succeeded in bringing together distinguished people from various influential groups in some 40 countries.

"We have exchanged experiences, discussed critical issues, and we expect to improve the policies in our respective countries when we return home. The people who are attending this conference are those behind the news," he remarked. (10)