The Link Between Democracy and Economic Growth in Indonesia

democracy in indonesia

In the two decades since Indonesia embraced democracy, it has made extraordinary progress in democratisation. Despite some serious setbacks, it remains the only country in Southeast Asia where all parliamentary and direct presidential elections have been held without violence or major irregularities.

Democracy has also contributed to the country’s economic growth. One study found that countries with strong democratic institutions tend to have higher economic growth than dictatorships. But the mechanisms behind this link remain largely unclear. Assistant professor Priya Mukherjee and colleagues examined Indonesia for the first time to understand the reasons for this connection. Their research, which involves comparing growth in more than 200 districts comparable to US counties, suggests that Indonesians benefit from a competitive political system that gives voters a voice on issues that affect them.

The competitive nature of Indonesian politics helps counter the influence of old elites and money politics. It is a system that can still resemble Game of Thrones, with horse-trading and dynastic struggles for power.

Joko Widodo’s rise to national office is testament to the power of this system. He is the first president to have come from outside the political or military elite since independence in 1945. But, even if he wins another term in April, it is unlikely that he will have the support he needs to tackle the country’s pressing problems.

As the election draws closer, the challenge to safeguarding the country’s democratic gains will fall to civic society groups. But the experience of recent mass protests shows that they are unlikely to create change unless they can translate their demands into a clear political message and an electoral alternative. Moreover, they must work with a state that has demonstrated little interest in listening to public opinion and an electoral system designed to limit their impact.

As Indonesia’s democracy matures, a new generation of politicians outside the elite is emerging. They are building networks and leveraging grassroots support to challenge the old guards that have dominated the country’s politics since the end of Suharto’s rule.

Whether these up-and-coming leaders can succeed in challenging the legacy of their elders will be crucial to Indonesia’s future. If they can build an electoral alternative and create pressure on vested interests, Indonesia may be able to avoid the sort of instability that has plagued many other democracies. But it will not be easy. A slew of factors, from corruption scandals to the proliferation of social media misinformation, pose formidable obstacles to democracy in indonesia. The stakes could not be higher. A strong and vibrant democracy is essential to Indonesia’s continued progress and to the success of its aspirations for global power and prosperity. By pursuing graduated reforms rather than a revolution, Indonesia avoided the immense bloodshed and uncertainty that would have accompanied an attempt to fully dismantle the old regime. But the price of that choice has been to leave powerful figures and institutions from the ancien régime with a seat at the table of power.