RI economic prediction a serious matter

RI economic prediction a serious matter

By Makmur Keliat

NEW DELHI (JP): Beyond any doubt, prediction is of great
importance to human beings, especially when it encourages people
to keep with their ambitions. Henceforth there is nothing wrong
with the recent prediction that Indonesia will become the world's
fifth largest economy by 2020.

It should be realized, however, that prediction does not
assure accomplishment. First of all, it is necessary to bear in
mind that predictions are neither neutral nor objective. The way
one sees and projects his future is largely shaped and determined
by his social and economic predispositions.

For instance, two men with different educational and economic
backgrounds will have different visions of their future. One who
has come from a well-off family and obtained a good education
will have more self-confidence to face his future than the other
who is less fortunate. Thus prediction is always a biased
assessment and made with certain predispositions.

In most cases, projections of a country's economic performance
are generally drawn through a simplification process. It has been
long argued that economic prediction has a strong inclination to
neglect and put aside social and political factors. Forecasts
based on figures and statistics usually entail a caveat "of
everything being equal".

Inevitably, there are inadequacies and one could say that
unpredictability, as well as predictability, is an inevitable
part of economics. Because of such shortcomings, a new tool of
analysis, based on political and economic studies, combining
economic indicators with social and political factors has gained
currency among scholars.

To strengthen this point, we can learn several invaluable
lessons from Latin American and Indian experiences. In the early
1960's, many economists had projected that countries in Latin and
Central America would be the most dynamic among developing
countries. However, as the course of events revealed, the real
situation in 1980's went in a totally different direction. Most
of them became defaulters in the 1980's and fell into debt-trap
situations.

Economists and politicians within and outside India had aired
the same high optimism in the 1950's. By virtue of its strong
commitment to build heavy and basic industry, and considering the
huge number of engineers, they predicted that India would be the
first among developing countries to compete on equal terms with
developed countries.

This prediction has not become reality as hitherto India is
still moving nowhere. India's GNP per capita then was almost as
big as South Korea's, yet no one had predicted that the South
Korean economy would be like it is at the present.

Hence, it is wise not to keep our heads too high, despite the
bright prediction about Indonesian economy. What we need, as a
Javanese proverb prudently advises us, is an attitude of humility
(ojo dumeh), together with vigilance and avoidance of feeling too
proud of our economic predictions (eling lan waspada).

We should be fully aware of the gloomy sides of Indonesian
economic development. Irrespective of our impressive economic
growth for the last 25 years, it is still an inconvenient
reality, if not an eyesore, --as government has also
admitted--that million people are still living beneath the
poverty line.

Capital is still too concentrated and circulated in Jakarta
and other big cities will likely question the essence of
relations between the center and the provinces in years to come.

Demands for democratization and respect for human rights will
continue to grow due to the increasing number of middle class and
could become a thorny problem for Indonesia with respect to the
rigidity of our political system.

In a very real sense, Indonesia has not passed the litmus test
of economic development enduring alongside a democratic political
system. How we will sort out the problem is of great importance
to sustain our economic development.

The writer is a Ph.D candidate at the School of International
Studies, Jawaharlal Nehru University, India.