Managing the global economy

The riots that struck Jakarta, Indonesia, in May, forcing President Suharto out of office, were in part politically motivated; Suharto's 32-year reign was anything but democratic. But the civil turmoil that sparked fires in the streets stemmed principally from economic discontent.

During the 1990s massive amounts of foreign capital flowed into Indonesia, helping to create the conditions for economic overextension; the country accumulated huge levels of dollar-based debt. Then came the fall. The nation's currency has lost over 80 percent of its value, in part due to fierce inflation; the banking system has been seriously shaken; businesses have shut their doors; and foreign capital has packed up and gone home. Indonesians are suffering. It can be argued that Indonesia's chaos constitutes a sharp lesson in the consequences of economic globalization.

 

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