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The 15the HW Arndt Memorial Lecture

How to do reform in a ‘second-best world’: the case of Indonesia



22nd September 2016


Law Link Lecture Theatre, Ground Floor, Law Building, 7 Fellows Rd, ANU


Dr Muhamad Chatib Basri, CReco Consulting and former Indonesian Minister of Finance



The word ‘reform’ has become a mantra to solve many economic problems in developing countries. Nevertheless, few reforms are successful. When economists are asked why, they usually blame ‘politics’ or ‘institutional failure’. But many reforms fail because international best practices generally do not take adequate account of developing country political systems and institutions. Reformers understand that institutions need to be changed, but in reality they are often constrained by the dilemma that institutional reform is a long-term process, whereas politicians typically have short time horizons. Economic policymakers do not have the luxury of working in an ‘empty space’. They have to live with political realities. Thus, a key question is how effective reform can be implemented given these institutional and political constraints?

This lecture will address this question with reference to Indonesia.

Dr M Chatib Basri is one of Indonesia’s leading economists and policymakers. He held two cabinet-level positions in the second Yudhoyono presidency, first as Head of the Investment Board and later as Minister of Finance. He serves on numerous high-level international and domestic boards and committees, and has been Indonesia’s ‘sherpa’ to the G20. He is the author of numerous academic publications, as well as being a prolific public commentator. Graduating from the University of Indonesia, he holds Masters and PhD degrees from The Australian National University, and has subsequently visited Australia on many occasions. He has held several major international fellowships at Harvard and elsewhere. Currently he is the Indonesia Project’s Thee Kian Wie Distinguished Visiting Professor.

The H W Arndt Memorial Lecture is an annual public event to commemorate the immense intellectual contribution of Heinz Arndt, who was a Professor of Economics at the ANU for half a century and played a key establishing role in undertaking work on the Indonesian economy.

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