Indonesia’s leap into good governance
In a globe-shifting moment this month, the world’s third-largest democracy officially began the process of joining a “club” of 38 nations that tracks one another’s dedication to good governance and inclusive growth. That was no small choice for Indonesia, a huge Southeast Asian country rife with corruption and trade protectionism but with hopes of becoming an advanced economy in two decades.
President Joko Widodo set up a team to launch reforms necessary for Indonesia to become a member of the Paris-based Organization for Economic Cooperation and Development. The OECD sets high standards for states in maintaining liberal democracy and free markets.
It also serves as a stamp of approval for foreign investors. With a large, young population, Indonesia needs faster economic growth and a high-tech industry to avoid the “trap” of remaining a middle-income nation. It now joins six other countries – Argentina, Brazil, Bulgaria, Croatia, Peru, and Romania – wishing to join a body that sets global standards on individual liberty, rule of law, and the protection of human rights.
The OECD describes itself as “a like-minded community” committed to a rules-based international order. Its members represent 80% of global trade and investment. Indonesian officials like to cite reforms in two countries that recently joined the organization: Costa Rica has lowered its budget deficit as a percentage of its economy, while Colombia has reduced foreign bribery by following OECD rules on anti-corruption procedures.
One obstacle looms large for Indonesia, the world’s largest majority-Muslim country. It needs a sign-off from Israel, an OECD member, to join the group. While the two countries had cordial relations before the war in Gaza, Indonesia now strongly backs a Palestinian state. The incoming president, Prabowo Subianto, will need to persuade Indonesia’s powerful Muslim groups that the benefits of OECD membership outweigh its foreign policy on the Middle East.
Joining the OECD – and meeting its 200 policy standards – would help Indonesia hold itself to account for an already-strong democracy but one that needs deep economic reform, especially on corruption. Set up after World War II to help European democracies learn from each other, the OECD is little known but large in influence because of its data collection and policy expertise. Nations ready to make a leap in good governance know where to turn for guidance.
