7 - Poverty in Democratizing Indonesia

Summary

Indonesia's Economic Crises

It was a global phenomenon, not unprecedented, and not totally unexpected. Economic histories had shown the frequency of a boom followed by a slump. Business persons and economists had actually observed hints of an avalanching financial crisis. Yet, they thought that the phenomenon would weed the economy from less viable economic elements and would result in a much strengthened economy. On the contrary, the phenomenon had turned out to be an extremely long and severe, calamitous economic situation.

Life was like a roller-coaster with one difference. This ride has no predictable end. People used to enjoy prosperity and rising expectation, with many plans for the years ahead. Suddenly and dramatically, their wealth, at least on paper, plummeted. They might have discussed poverty earlier, but they never experienced being poor, though they were still far from [at a] subsistence level. Statistically, they were not recorded as “poor” but they felt terribly poor. Another distinguishing character is that they had [a] strong political voice. They mostly included the elite, such as scholars, politicians, bureaucrats, business persons, journalists, and those who work in NGOs.

These two paragraphs may sound like they are describing the recent global great recession starting in July 2007 in the United States and deepening and widening worldwide since 2008 until the first half of 2009. In fact, the first paragraph is a description from O'Malley (1977, p. 60), when he portrayed the economic situation in pre-independence Indonesia during the 1930s, the time when the world suffered from the Great Depression. Indonesia had witnessed spectacular economic growth during the first three decades of the twentieth century, particularly compared with the last two decades of the nineteenth century. Then, the worldwide Great Depression, starting from the United States, crushed Indonesia's booming prosperity. It should also be noted that the global 1930s crisis had contributed to rising nationalism in Indonesia and resulted in the independence of Indonesia in 1945. Meanwhile, the second paragraph is a picture of Indonesia during the severe 1997–98 Asian crises depicted in Ananta (2003, p. 8). Yet, Indonesia generally enjoyed a remarkable economic success under the New Order era (before the crisis) with the economy growing by an average of 8 per cent annually from the late 1980s.