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.