Globalization in Indonesia

An example of the IMF’s ability to promote strong, stable economies is the case of Jordan. In the 1980s the declining oil prices and the related recessions in the Middle Eastern oil exporting countries was disadvantageous to Jordan. In 1989 Jordan had a 30-35 percent unemployment rate and was having a hard time due to their external debt. This led the authorities to request the country’s first arrangement with the IMF. Economic reforms were a part of the agreement between Jordan and the IMF. Jordan agreed to a series of five year reforms financed by the IMF, therefore the government took on huge reforms prioritizing foreign investment and easier trade policies. They were ultimately able to reduce the overall debt payment up to a manageable level. Jordan is currently regarded as a country by which the effectiveness of the IMF assistance is assessed.

Argentina is a well known case study of the failure or negative outcome of some IMF's standard policies. In fact, Argentina carefully applied policies dictated by IMF, but, until it stuck up with those policies, it couldn't step out from its crisis, and it ran into even deeper economic and social problems. This failure of the IMF has often been cited as the demonstration of unsuitability of the standard IMF approach (the usual so-called Washington Consensus) for solving economic crisis in developing countries (Serra & Stiglitz, 2008, p. 44). Also, this failure led to hostile feelings versus IMF among the population of Argentina (Kanenguiser, 2000) and fueled generalised suspects over IMF decision-making process being politicized and serving

Due to capital limitations, most governments, particularly in the developing nations borrow funds from their bilateral friends and organizations such as World Bank and International Monetary Fund (IMF) in earnest to enable them pursue development projects, and sometimes to correct balance-of-payment deficits. Nevertheless, such governments must adhere to some outlined conditions that are spelt out in the article of agreement in order for them to secure the loans; otherwise, the loans are withheld (White, 2012). Equally, a healthy population significantly contributes to economic development of

There is a need for organizations like HIPC and IMF to work together because they in tangent can develop better methods of allocating money to poor countries by operating and communicating in a cohesive manner that makes public the amount of money forgiven and the reasons behind the debt reduction. Since the HIPC has so many strict guidelines to reduce, not eliminate debt from poor countries, the combined efforts of the IMF could alleviate the debt crisis in these select countires through a simpler and faster means than only going through one organization.

Indonesia is the sixteenth largest economy, the largest economy in the South-east Asian economic region with the world's fourth largest population (263 million in 2017). It is an emerging economy that has increased its international integration, trade liberalisation and diverted from policies of import substitution towards export-led development. Indonesia is a member of the Group of 20 (G20) major economies and has been an active founding member of the World Trade Organisation (WTO). The impact of globalisation has benefited Indonesia as quality of life indicators and economic developments have improved but it also presents the challenge of improving regulations, building more competitive industries, increasing investment into education and infrastructure to remain competitive. Consequently, Indonesia has introduced numerous strategies to promote economic growth and development.

Indonesia complained of their lack of autonomy In regions such as Maluku or other areas of Eastern Indonesia, “a low capacity for generating local revenue restricted the ability to adapt projects and development to local conditions” (Bertrand, 198).). The scanty amounts of funds were unable to support the poor and other problems. Bertrand states, “Faced with the New Order regime introduced mild reforms that were designed to address some technical issues while avoiding political decentralization” (Bertrand, 198). In 1995 the Minister of Home Affairs selected 26 districts were used to evaluate the measures designed to increase autonomy. They noticed an increase in Indonesia budget, but they still failed to support the poor, which resulted in

Csáki György (2013): IMF Loans to Hungary, 1996–2008. Published in: Public Finance Quarterly 2013/1 (p. 95-110.)

Harvard Business School’s Case Study “Aid, Debt Relief, and Trade: An agenda for fighting World Poverty” outlines the steps, and missteps, that the world community has taken since World War II to address the efficacy of international assistance. The study focuses on international financial institutions (IFIs) and their ability to help poor nations break out of poverty and the possible obligations of rich, developed countries to assist the heavily indebted poor countries (HIPCs). Additionally, the study seeks to see if this assistance has been and can be parlayed into growth and investment for the HIPCs.

While Thailand undeniably needed help, the efforts of the IMF only degraded the situation further. As Jefferey Garten stated in “The Chase”:

Jamaica economists has already prepared a long term plan to solve their crisis.They wanted to request a long term loan with the hope of funneling it gradually into their drying economy.The IMF,however,had other plans and rejected their proposal.The IMF felt that jamaica was unproductive and instead provided a short term loan with a lot of usage conditions

Those capital directly or indirectly affect the stock and estate market that result in house price and stock rose sharply. Then bubble economy is formed. At the same time, the production cost increased and make investment environment got worse. Thai Baht was depreciated greatly, the unemployment rate increased and then economic recession. On November 1997, South Korean also get the influence on their exchange currency. Moreover, lots of banks and security companies went bankrupt in Japan. At this point, Asian financial crisis started. At the second stage, in Indonesia, financial crisis broke out again in 1998. They faced the most serious economic recession in their history. The International Monetary Funds had made a strategy to deal with it to help Indonesia, but failed to achieve the desired results. Indonesia government have to implemented a new monetary policy, yet International Monetary Funds and America against it. Indonesia have a big trouble on Political and economy: sharply fall in exchange rate, interest rate volatile, inflation increase rapidly and government deficit increase and so on. After the crisis spread to Japan, Japanese yen also depreciated. And the problem of financial became more serious. Many large industries were forced shut down. At the last stage of crisis, a increasing number of countries got the economic problem. International speculator George Soros is a currency speculator and stock

In 1997, the Thai baht came under speculative attack from international investors and the Thai government was eventually unable to support its currency peg. Due to the interconnected nature of the global economy, contagion occurred and the problems affecting Thailand spread to countries such as Malaysia, Indonesia, the Philippines, and South Korea. This event came to be known as the Asian Financial Crisis in the West. However, in South Korea it is known as “the IMF,” as misguided policies of the International Monetary Fund (IMF) led to a deep and more painful recession, inequality and an gutted the nation’s middle-class. Below is an overview of the IMF’s “rescue” of Korea in 1997/1998, a description of my opinion on the situation, and my opinion of the fairness and effectiveness of international financial institutions (IFIs) in general.

Similarly a study was conducted on the effect of IMF programs on economic growth by (Przeworski & Vreeland, 2000). The study indicates that the government goes due to pressure under these programs of IMF due to the foreign reserve crises and also to secure from the governmental cost of adjustment policies. Due to this programme, the growth rate will slow until the programme exists in a country. When they leave this programme the growth rate becomes high and increases but not that much because they have participated from IMF.

I argue that the state is a relatively weak player in delivering public policy in contemporary governance. I make this argument with reference to a program implement after the 1997 economic crisis in Indonesia. Djiwandono (2006) concludes that the economic crisis in 1997 was caused by the combination of weak domestic economic and inefficiencies financial structures and “contagion” forces from external. Specifically, the combination of external shock starting in Thailand in 1997 and the weak Indonesia banking system soon resulted a systemic banking crisis (Omori, 2014). Data shows that Rupiah depreciated 80% in just less than 12 months, economic growth slumped from 7-8% annually to negative growth of approximately 14%, inflation hiked from single digits to 80%, reversed capital flowed by $22 billion, unemployment rose by 5 million and poor people doubled from 12% to close to 25% (Djiwandono, 2006). On January 15, 1998 Indonesian government launched a program known as an “Economic Recovery and Reform Program” or “IMF-Plus Reforms Program”. This was a broad program which consisted of some specific programs such as currency stabilization (Rupiah in term of Dollar), hyperinflation prevention, banking restructuring, structural reformation, private foreign debt settlement and assistance programs for the poor (Ministry of Finance Republic of Indonesia, 2013). The aim of the program is to seize the decline of Rupiah, to restore market lost confidence in government, to deal with

The IMF is financed by quota which is charged and paid by all the nations who are members. This quota is based on the member countries wealth. Which means if a country paying higher contribution they will get greater voting rights in the decision making. If a member has a problem can apply and get a short period grant, but of course just credit against because the IMF is not a charity body. (BBC, 2012) "The largest member of the IMF is the United States, with a current quota of SDR 42.1 billion (about $65 billion), and the smallest member is Tuvalu, with a current quota of SDR 1.8 million (about $2.78 million)" (IMF/Quotas, 2015) This quota system has an impact on the quota