Indonesian economic development: Mirage or miracle?

This paper focuses on a few major developments that took place during the three decades from the late 1960s to the Asian financial crisis. The study finds, in retrospect, that many of the Indonesian economy’s weaknesses—now so glaringly apparent—were there all the time. The paper concludes that the Indonesian banking crisis was primarily domestic in nature, more so than the crises in Korea and Thailand. The extent of the failure was much more widespread and probably resulted from a chain of bank runs and bank closings, reinforced by uncertainty and lack of faith in the government’s commitment to the IMF program and IMF fumbling.