Institutional Economic on Indonesian Decentralization

An Opinion by Jacky's Opinion

Work Bank in Quality of Growth was publishes on 2002 told many thing to underdevelopment countries; the rule and role to government for taking some action to intervention market failure. Institutional Economics is just an issue in Indonesia and also in debate forums, till implementation by Otonomi Daerah (decentralization) in 2002. Although Indonesia is late to bring it to the formal regulation, we believe years by years, Institutional Economics is being basic or standard for government. World Bank said that government must involve much to handle market failures, such as Education, Health, Poverty and the most important relate on our topic is Government efficiency.

In my pepper on chapter one describes some relevant theory, its development till now, and how the government supposes to do. Many problems about Inefficiency must be taken by smart regulation, as well as how the government tries to fight the corruption which becomes the main-root of all problems.

And the last topic will show us how the role of the game. Although the pepper didn’t downing to the earth, only issue and theory; many case can be explain by these theory. I would like to raise an example for sharpness our mind. Work Bank in many times always proclaims the issues. As we see, Institutional Economics try to complete the weakness of Neoclassical Thought.

To increase our government performs such fighting force the corruption, market failures in environment issue, health and poverty. Institutional Economics try to make their main tool like repairing relationship between principle–agent problem, transparency and check and balance. In Indonesia we see the principle–agent become main cause of inefficiency; legislative and executive, even the government and businessman and even more government–businessman–citizen.

To reduce these problem, all countries were agree that law became the main regulations suppose to be in the front to open all problems. Therefore, law can’t work if government and the Judicative can support it.

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