Revatilization of Indonesia's economy : attempts to solve the twin-critical-economic problems and to build foundation for future economic development

Abstract

After the onset of the Asian Financial Crisis, particularly since the beginning of the 2000s, unemployment and poverty have tended to increase in Indonesia. During the same period, economic growth has actually been getting higher. Economic theory states that a higher growth is associated with more employment and hence reduces both unemployment and poverty. Thus there is an economic puzzle interesting to be studied: why do unemployment and poverty problems get worse while the economy is growing? What are economic and non-economic factors associated with the problems? How important is institutional development in solving for the problems? The twin-critical problems (unemployment and poverty) are arguably of critical important, not only because of their increasing tendency but also due to their consequences which may stretch beyond economic aspect, e.g. may induce social problems and political instability.