JAKARTA (JP): Several preconditions must be established within

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)