Growth Not Greed, Mr. Suharto

The rioting and deaths that accompanied Indonesia's recent election highlight one of the great paradoxes of Southeast Asia. Nowhere in the region has a nation so successfully effected such great macroeconomic policies only to mess up on the micro side. Indonesia has solid fiscal and monetary stability combined with a sophisticated floating currency program that is the envy of all its neighbors, especially the Thais. This has given the country low inflation and strong economic growth for over a decade. But recently, investment has become so concentrated among the family and friends of President Suharto that the benefits of the country's strong economic growth aren't trickling down. Crony capitalism is not expanding Indonesia's small middle class nor is it raising the living standards of most of the country's 200 million people. In fact, it is alienating many local business people and foreign investors who are losing out to the well-connected and the bribe givers.

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