Why The State Is A Weak Player On Public Policy

1432 Words Apr 27th, 2015 6 Pages
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…

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