What is a people-driven strategy?
What is a people-driven strategy?
By Dj. A. Simarmata
JAKARTA (JP): An article by colleague H.S. Dillon in this
newspaper on April 10 was intriguing to me in that it shed some
badly needed light on the protracted debate involving the recent
crisis and the country's development.
There have been many seminars or discussions on the issues,
but like the Great Depression of the 1930's, the case is never
closed.
Dillon cited economist Professor Sumitro Djojohadikusumo's
call to undertake a fundamental change in our development
strategy based on careful study into the causes, effects and
implications of the crisis.
Dillon responded by stating that the causes of the crisis were
namely injustice and discrimination, along with the massive
outflow of capital.
He proposed a people-driven strategy, agriculture development
and agro-industrialization. But is a people-driven strategy
compatible with agriculture development and agro-
industrialization, and does it contradict market and technology-
driven strategies?
To some extent, the effects and implications are easier to
pinpoint, namely poverty, the spectacular rise of the government
debt -- both domestically and internationally -- and so on. On
the positive side, the crisis did lead to the ousting of
Soeharto, something that was unimaginable before the crisis.
Literature about the crisis, however, lacks a systematic study
of the causes and tends to generalize the problems the nation is
currently faced with.
It is important to cite Joseph Stiglitz, who said that most
economists in developing countries were only engaged in economic
journalism, having no value for formulating sound economic
policies.
Solid empirical research is needed. A reading of Alan
Greenspan's biography reveals the many years he devoted to field
studies before becoming a central banker.
A country like Indonesia is desperately short of good economic
policies prepared by apt economists with solid and up-to-date
knowledge and experience.
Citing the economist Sarbini Soemawinata, the country needs "a
real solid picture" of the economy.
Statistics from 1995 show that more than 20 million people are
landless laborers, and more than 30 million are small
landholders, having less than half a hectare of land. Most of
these people live on Java.
The question is whether agriculture is still appropriate for
Java. If it is, should it be land-intensive or knowledge-
intensive agriculture?
Neither is feasible, because land is scarce and people are
lacking in education, as Dillon stated.
But land is abundant in Kalimantan, Papua (officially Irian
Jaya), and Sumatera. Our most pressing problem for Java is to
find the most appropriate means of absorbing the landless
laborers and small landholders. Hence, the best strategy for Java
is labor-intensive clean industries and not those which are
water-intensive.
The agro-industry terminology itself raises some confusion. Is
it an industry or an agriculture?
Industrial activities are conducted inside a building and
protected from the elements. Because of this prices can be
stabilized.
Agriculture, however, is conducted out in the open, climate
dependent, and needs a comparatively large amount of land to
yield a profit.
So where lies agro-industry? In short, agro-industry belongs
to activities of an industrial nature. A people-driven strategy
is not synonymous with agriculture. If agriculture is a dominant
activity, a people-driven strategy is equivalent to agricultural
development.
If the country is in the industrial stage, it is determined by
industrial development in which principal activities provide
income and jobs.
But what about market-driven development? In a true market
system, both the products and processes are derived from people's
legitimate needs.
The market is a place where they freely buy what they need,
according to their tastes and incomes, and where they sell
products, too. People in the market practice truly decentralized
decision-making. This is a democratic way of living.
The true market system promotes and maintains the
decentralized system. So let there be the market, and let there
be freedom for everyone to choose what to buy and sell.
Every person has individual talents, leading to specialization
and productivity, and this can become a source of welfare
improvement for the country. A development strategy has to enable
everyone to do what they are good at.
Nobody can provide all the things he needs in a specialized
economy. Everyone has to be able to exchange his products with
the products of others, and the market guarantees this process.
Everyone will inevitably depend on the products of others,
provoking an interdependent system.
Hence, the market is an institution enabling individual
talents to flourish, while at the same time a means of securing
social welfare. Instead of an adversary, the market becomes a
friend.
Interchange of products between the islands is equal to
domestic inter-islands trade. Promoting internal trade would lead
to more solid national economic unity.
Intensive domestic trade entails domestic travel of persons,
which supports nation building.
Domestic trade is the other side of regional specialization in
international trade. Both regional and individual specialization
also improve our national welfare. So the market is again a
friend, not a foe, synchronizing its multiple objectives.
The writer is a lecturer, author of several books, and an
economics consultant in Jakarta.