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Indonesian Economic Development Had Been Slower To Take Off As It Was The ...

Indonesian economic development had been slower to take off as it was the first government after independence, which had abandoned the most promising of the economic development strategies advocated by the departing Dutch colonial administration. The Indonesian economy would soon be hampered by the consequences of the Indonesian government's attempts to retain control of East Timor in the face of its efforts to gain independence. Eventually, those actions prompted United Nations intervention under the auspices of the United States and Australia. Economists and political analysts hoped that the change of regime in Indonesia would increase the chances of economic reforms and the curtailing of corruption (Howard & Louis, 2000, p.239).
The financial meltdown of the East Asia region in 1997 can be explained by corruption in parts of the East Asia economies. Some of the countries of East Asia have a reputation for having corrupt governments and equally corrupt economies. Taiwan is probably the country in East Asia with the worst reputation with regard to corruption. The governments of Taiwan had been dominated by the former Nationalists coalition that had governed main land China before the communist take over in 1949. Corruption however, did not prevent the other countries of East Asia trading with Taiwan. The United States, as part of its containment of communist China, backed Taiwan itself. Taiwan is wary of China's intentions towards it, which causes tension within the region. Without American support Taiwan would prove no match for China. In the long term corruption does not threaten trade within the East Asia region. However, the implications of corruption could include a loss in confidence that trade is being carried out fairly and effectively. The fear of corruption could have implications for trade with countries outside of the East Asia region, such as the United States and members of the European Union. Corruption can have a harmful effect upon prices and confidence as well as business transparency (Newnham & Evans, 1998 p. 139).
Another explanation of the financial meltdown in East Asia in 1997 is based on the level of financial and business regulations in parts of the region. The East Asia region was traditionally subject to less developed independent financial regulation, rather than other parts of the global economy such as the United States and the European Union. The level of interference in the region's economies was generally determined by governments that usually controlled the central banks and access to loans and investments. The region's economies despite high levels of government interventions had a reputation for being highly liberalised due to the lack of recognisable financial and business laws. The lack of financial regulation was not seen by many governments or experts whilst the East Asia region was experiencing high levels of sustained economic growth.

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