The need for a new paradigm

The need for a new paradigm

The one-day economic seminar at the Center for Strategic and
International Studies on Tuesday was conclusive about the need
for a new paradigm for Indonesian development to gear up the
country for global competition. The panel of such senior
economists as Emil Salim, Sjahrir, Moh. Arsjad Anwar, Mari
Pangestu, Djisman Simandjuntak and Bungaran Saragih charted out
the demands of future market competition and listed the agenda
for new reform measures to meet those demands.

The meeting understandably did not produce a clear-cut concept
on which the new paradigm should be built. But the schools of
thought among the economists share two fundamentals -- political
reform (democratization) and good governance -- which they
reckoned should be included in the new paradigm.

Emil and Sjahrir observed the wide gap between economic and
political reform (democratization) which, if ignored much longer,
could undermine the overall stability that is a basic
prerequisite for development. Djisman considered good governance
as a key factor to enable the business sector to compete in the
global market. Mari and other economists did not explicitly cite
good governance, but phrased it as an effective and transparent
bureaucratic machinery that protects private property rights and
upholds the rule of law.

Analysts and development economists overseas have often
discussed the relations between democracy and good governance and
economic growth. The largest development agencies -- the Manila-
based Asian Development Bank and the Washington-based World Bank
-- have also conducted comprehensive research on these issues,
taking the economic success of East Asian countries as case
studies.

The empirical studies were not so conclusive about the clear
ties between economic development and democratization, in view of
the wide diversity of the historical, social and cultural
backgrounds of East Asian countries. But they all share the same
conclusion that good governance is key to good management of
economic development. The studies also show that good governance
and democratization are basically intertwined. In fact, the
requirements for good governance have increasingly been the
subjects of policy dialogs between donors and borrowers.

Accountability, transparency and predictability are often
cited as the fundamentals for good governance. As the East Asian
experiences show, their sound development management rests on
political and procedural predictability on the basis of legal and
administrative autonomy from interest groups. This means that
predictability grounded in institutions -- rather than stability
grounded in persons -- is the key to sound development
management.

The Asian Development Bank noted in a recent study on good
governance that economic reform or liberalization will not
produce long-term growth unless it is supported by institutions,
norms and practices that sharply distinguish the interests of the
state from the profits of entrepreneurial efforts.

However, it is credible public institutions that are the major
missing component in Indonesia's overall development.

The government actually has been aware of the pivotal role of
good governance to support the implementation of the packages of
economic reform measures. But bureaucratic reform -- or
debureaucratization, as the government likes to phrase it -- is
not only still in its very early stages, but has little potential
for developing good governance . The problem is that the process
is separated from political reform and the building of civil
institutions, which is the prerequisite for establishing
accountability, transparency and predictability within the
government bureaucracy.