Indonesia: a tale of misplaced expectations

Abstract

Few countries have been burdened with such great expectations as Indonesia and have failed to meet them in the ways expected. Economists have persistently predicted that Indonesia could be an economic giant in the region, challenging the state-led economies of Northeast Asia on the basis of free market policies. After the fall of Soeharto in 1998, pluralist political scientists saw Indonesia as a shining light for democratic transition. More recently, Indonesia has been hailed as a model for how democracy might work in a Muslim-majority country. Yet, we are still waiting for a new economic giant to emerge while democracy has not been able to resolve growing concentration of power and wealth in Indonesian society or to stem growing social resentment. Reactionary Islamic populism has often threatened Indonesia's reputation for religious moderation. Why have so many analysts had such great expectations of Indonesia and how have they explained the seeming disappointments? We propose that the institutions of markets and democracy are not a good starting point for explaining things. The problem lies in the way economic and social power is constructed and in the interests of powerful oligarchies that continue to dominate the political and economic landscape.