A comprehensive study on the relationship of democracy and economic development made by Adam Przeworski and Fernando Limongi. They studied the behavior of each country related to the implementation of democracy and economic development level (more precisely income per capita) in the period 1950-1990. From their calculations, the state per capita income below U.S. $ 1500, its democratic experiment lasted for eight years and then fail.
The per capita income here is calculated based on PPP (Purchasing Power Parity) is adjusted to the level of cost of living in the country concerned. PPP per capita income is higher than the income per capita is real that does not take into account differences in price levels and purchasing power in each country. For countries with per capita income between 1500-3000 U.S. dollars, the democratic experiment lasted an average of about 18 years. The per capita income above U.S. $ 6000 makes the process of democracy can survive. Once a country becomes richer country, then democracy becomes sustainable.
The per capita income in real Indonesia today is around 800 U.S. dollars and PPP around 3,000 U.S. dollars. Viewed from the side of economic development, Indonesia has a pretty good chance, though still substantial possibility of failure, to continue to develop democracy. The process of democratic development in Indonesia has been going on for about five years. If the slow economic growth with relatively high unemployment and tend to increase as we experience today, then according to the study of democracy in Indonesia may be able to survive only about two to three more general elections. If economic development can be better, so that income per capita could be twice that in the next decade, the possibility of democracy in Indonesia will be able to develop continuously.
In the first five years of democracy in Indonesia, the Indonesian economy in the new phase of stability can not grow tall, even level of income per capita has not returned to pre-crisis levels. The process of slow economic recovery and rising unemployment that makes some voters disappointed as indicated by the decline in votes received in the PDI-P legislative elections last April, and President Megawati is only the second ranked in the first round of presidential elections, as well as the desire for the emergence of new leaders as indicated by the high popularity of Susilo Bambang Yudhoyono.
However, if the new government will not significantly improve the economy during the next five years, the public disillusionment not only against the government, but also against democracy will increase and will threaten the sustainability of democracy. Economic stagnation in the next five years not only will lead voters to get a new leader, but also further lower their confidence in the democratic process.
To make a per capita income doubled in the decade ahead, of course, is not easy. However, if the president-elect can form the cabinet (the economy) is reliable, which can stimulate and create a conducive climate for investment, the economic development will be run much faster. Current economic developments in some sectors, such as construction, transportation, telecommunications, trade, finance, and even the manufacturing industry has shown encouraging improvement, though not ideal, especially for the manufacturing sector.
Unfortunately the growth of the mining sector should benefit from high oil prices and commodity mining actually experienced negative growth. Similarly, the development of the agricultural sector is still disappointing. From the expenditure side, the investment and export activity is still to be done extra effort to improve performance. To create a conducive investment climate not only need the steps in the economic field, but also the law and cooperation for better and probisnis between central and local governments.
The monetary policy was already in the hands of an independent Bank Indonesia, so as not to get political pressure both from the executive and the legislature for specific purposes that can disrupt economic stability. Live a new government policy choice whether to direct the fiscal policy more stimulative, of course with due observance of fiscal prudence (fiscal prudentiality), or remain conservative today. Maintain a conservative fiscal policy that requires compensation in the bold steps and decisively to overcome the structural problems that hinder investment, such as law, employment, and local government employment. If not, then the monetary and fiscal policies that are neutral as this will only result in low growth and high unemployment.
In the hands of a new administration not only recovery and economic development at stake, but also the sustainability of democracy.
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