Muhamad Chatib Basri, June 2016

    In this paper, Dr. Muhamad Chatib Basri, who was Indonesia’s Minister of Finance during the Taper Tantrum (TT) period, analyzes the response to the TT of the five hardest-hit countries, dubbed the “Fragile Five” (Brazil, India, Indonesia, South Africa, and Turkey), and describes how Indonesia was able to mitigate the negative effects of the TT so quickly and effectively. Dr. Basri’s account provides many insights in the realm of macroeconomic management amidst external shocks that should be quite useful to emerging markets as the Fed now contemplates raising interest rates, which could have the same impact as the TT. Dr. Basri wrote this paper while a Senior Fellow at the Ash Center for Democratic Governance and Innovation and is now in the Department of Economics at the University of Indonesia. 

    Rema Hanna, October 2012 

    This paper uses a unique data-set from Indonesia on what individuals know about the income distribution in their village to test theories such as Jackson and Rogers (2007) that link information aggregation in networks to the structure of the network. The observed patterns are consistent with a basic diffusion model: more central individuals are better informed, and individuals are able to better evaluate the poverty status of those to whom they are more socially proximate. To understand what the theory predicts for cross-village patterns, this paper estimates a simple diffusion model using within-village variation, simulate network-level diffusion under this model for the over 600 different networks in our data, and use this simulated data to gauge what the simple diffusion model predicts for the cross-village relationship between information diffusion and network characteristics (e.g. clustering, density). The coefficients in these simulated regressions are generally consistent with relationships suggested in previous theoretical work, even though in our setting formal analytical predictions have not been derived. This paper then shows that the qualitative predictions from the simulated model largely match the actual data in the sense that we obtain similar results both when the dependent variable is an empirical measure of the accuracy of a village’s aggregate information and when it is the simulation outcome. Finally, this paper considers a real-world application to community based targeting, where villagers chose which households should receive an anti-poverty program, and show that networks with better diffusive properties (as predicted by our model) differentially benefit from community based targeting policies.

    By David Dapice and Edward A. Cunningham, December 2011

    Ensuring affordable, stable, and accessible energy supply remains one of the most critical functions of government, particularly in the developing world. The creation and expansion of a national energy system presents governments with inherent risks that must be managed if an economy is to be supplied with the energy it requires to grow. Some risks are structural, and inherent to the sector itself. Energy systems are characterized by high levels of capital intensity (e.g. oil refining), long-cycle investments with extended pay-back periods (e.g. oil exploration and production), natural monopolies (e.g. electric grid and gas transmission), and high levels of risk that result from the combination of these attributes. Energy flows may also carry the added complexity of perceived national security externalities, such as supply risk in the form of oil import dependency on one partner.

    Rosengard, Jay K.; Prasetyantoko, A.; May, 2011

    This article marks a new era of collaboration between the Center’s faculty and their counterparts in Indonesia. Authors Jay Rosengard, lecturer in public policy at HKS, and A. Prasetyantoko, head of the Institute for Research and Social Service at Atma Jaya Catholic University in Jakarta, argue that Indonesia’s financial sector has two paradoxes: 1) Indonesia has been a global leader in microfinance for the past 25 years, but access to microfinance services is declining; and 2) Indonesia’s commercial banks are liquid, solvent, and profitable, and the Indonesian economy has been doing well over the past decade, but small- and medium-sized enterprises are facing a credit crunch. Although Indonesia is underbanked, most commercial banks have been unresponsive to unmet effective demand.

    Ho, Dang Hoa, and Malcolm McPherson. 2010. “Land Policy for Socioeconomic Development in Vietnam”. Read Full Paper Abstract

    Dang Hoa Ho and Malcolm McPherson, May 2010

    This paper is part of a study ”Policy Analysis for the Development of Land Policy for Socio-Economic Development.” Land policy relates to the institutional arrangements through which the Government of Vietnam defines which individuals and groups have access to rights in land and the circumstances that apply to gaining and retaining that access. The overall goal is to ensure that land in Vietnam is used efficiently and equitably so as to achieve the government's objectives of rapid economic growth, poverty reduction, food security, international competitiveness, social harmony, and environmental sustainability.