Introduction

Abstract

Since the middle of 1997, we have witnessed momentous and tragic events in Indonesia. Momentous because nobody — from the pre-eminent Washington institutions, to rating agencies and academics — foresaw the events, and we still have only an imperfect understanding of their origins and future course. And tragic because ordinary Indonesians are suffering a great deal, and many have experienced a substantial decline in their living standards. As the 1998 annual World Bank (1998a) assessment of the country soberly observed:

Indonesia is in deep crisis. A country that achieved decades of rapid growth, stability, and poverty reduction, is now near economic collapse…. No country in recent history, let alone one the size of Indonesia, has ever suffered such a dramatic reversal of fortune.