The Politics of Development Policy and Development Policy Reform in New Order Indonesia

How can we account for Indonesia’s astonishing development performance between 1965 and 1997—rapid growth, massive reduction in the incidence of poverty, low income-inequality and substantial diversification of the economy—in the face of extremely dirigiste microeconomic policies, even by developing country standards, and massive, systemic and endemic rent-seeking and corruption? This question is answered by demonstrating that Suharto, the leader of Indonesia’s New Order government, was extremely successful in building and sustaining a procapitalist, pro-integration with the world economy, and pro-growth with equity political coalition in which corruption played a central role.http://deepblue.lib.umich.edu/bitstream/2027.42/40018/3/wp632.pd

Corruption and Democracy

What is the impact of democracy on corruption? In most models, analysts assume a negative relationship, with more democracy leading to less corruption. But recent theoretical developments and case evidence support an inverted U relationship between corruption and democracy. By drawing on a panel data set covering a large number of countries between 1996 and 2003, substantial empirical support is found for an inverted U relationship between democracy and corruption. The turning point in corruption occurs rather early in the life of new democracies and at rather low per capita incomes.corruption, electoral democracy, consolidated democracy, rule of law, government effectiveness

The Politics of Development Policy and Development Policy Reform in New Order Indonesia

How can we account for Indonesia’s astonishing development performance between 1965 and 1997—rapid growth, massive reduction in the incidence of poverty, low income-inequality and substantial diversification of the economy—in the face of extremely dirigiste microeconomic policies, even by developing country standards, and massive, systemic and endemic rent-seeking and corruption? This question is answered by demonstrating that Suharto, the leader of Indonesia’s New Order government, was extremely successful in building and sustaining a procapitalist, pro-integration with the world economy, and pro-growth with equity political coalition in which corruption played a central role.Suharto, New Order, corruption, Indonesia, development policy, economic reform

Is Utility Transferable? A Revealed Preference Analysis

We provide a revealed preference analysis of the transferable utility hypothesis, which is widely used in economic models. First, we establish revealed preference conditions that must be satisfied for observed group behavior to be consistent with Pareto efficiency under transferable utility. Next, we show that these conditions are easily testable by means of integer programming methods. The tests are entirely nonparametric, which makes them robust with respect to specification errors. Finally, we demonstrate the practical usefulness of our conditions by means of an application to Spanish consumption data. To the best of our knowledge, this is the first empirical test of the transferable utility hypothesis.transferable utility hypothesis;generalized quasi-linearity;nonparamet- ric tests;revealed preferences

Degrees of Cooperation in Household Consumption Models: A Revealed Preference Analysis

We develop a revealed preference approach to analyze non-unitary con- sumption models with intrahousehold allocations deviating from the cooper- ative (or Pareto e¢ cient) solution. At a theoretical level, we establish re- vealed preference conditions of household consumption models with varying degrees of cooperation. Using these conditions, we show independence (or non-nestedness) of the di¤erent (cooperative-noncooperative) models. At a practical level, we show that our characterization implies testable conditions for a whole spectrum of cooperative-noncooperative models that can be verified by means of mixed integer programming (MIP) methods. This MIP formula- tion is particularly attractive in view of empirical analysis. An application to data drawn from the Russia Longitudinal Monitoring Survey (RLMS) demon- strates the empirical relevance of consumption models that account for limited intrahousehold cooperation.household consumption;intrahousehold cooperation;revealed preferences;Generalized Axiom of Revealed Preference (GARP);mixed in- teger programming (MIP).

Noncooperative Household Consumption with Caring

We present a household consumption model that accounts for caring house- hold members, while allowing for noncooperative behavior in decisions on pub- lic goods. The intrahousehold consumption outcome critically depends on the degree of caring between the household members. By varying the degree of in- trahousehold caring, the model encompasses a whole continuum of household consumption models that are situated between the fully cooperative model and the noncooperative model without caring. This feature is used to define a measure for the degree of cooperation within the household. We also establish a dual characterization of our noncooperative model with caring preferences: we show that the model is dually equivalent to a noncooperative model with non-caring preferences that is characterized by intrahousehold transfers. Fi- nally, following a revealed preference approach, we derive testable implications of the model for empirical data. We demonstrate the practical usefulness of the model through an illustrative application.household consumption;caring preferences;intrahousehold coop- eration;Nash equilibrium;revealed preferences

Indonesia’s Centripetal Democracy and Economic Growth

What has been the impact of democracy on growth in Indonesia? An early view emphasized a growth and investment slowdown, but more recent data suggest otherwise. What accounts for the reversion to New Order growth and investment rates? My answer is the adoption of more centripetal and developmental democratic institutions in an otherwise messy democracy that has pushed political parties and presidents to compete for votes by promising to clean up government and restore growth

Southeast Asia’s Democratic Developmental States and Economic Growth

How has democracy impacted growth in Southeast Asia? This question can be answered by demonstrating how political elites in Indonesia, Malaysia and Thailand crafted quite unique democratic developmental states that enabled them to provide the public goods and public policies to maintain high growth. Because of this, growth under democracy has been as high as it was during the heyday of these polities’ developmental autocracies. Moreover, as there was no single dominant pathway to the construction of democratic development in these polities, it looks like political elites were able to take local conditions and history into account suggesting that political elites have been as effective in selectively intervening in the structure of democratic politics as they have been in intervening in the economy

Southeast Asia’s Democratic Developmental States and Economic Growth

How has democracy impacted growth in Southeast Asia? This question can be answered by demonstrating how political elites in Indonesia, Malaysia and Thailand crafted quite unique democratic developmental states that enabled them to provide the public goods and public policies to maintain high growth. Because of this, growth under democracy has been as high as it was during the heyday of these polities’ developmental autocracies. Moreover, as there was no single dominant pathway to the construction of democratic development in these polities, it looks like political elites were able to take local conditions and history into account suggesting that political elites have been as effective in selectively intervening in the structure of democratic politics as they have been in intervening in the economy