Indonesian investment reform
by Tim Wilson, May 25, 2011
One of the areas of public policy often overlooked in poverty alleviation is that around foreign direct investment. FDI is clearly an enormous boon for countries because it normally brings with it money, technology, skills and most importantly, jobs. It also tends to bring infrastructure.
Significant investment flows are already going into South East Asia and China because they are where growth opportunities exist as people are lifted out of poverty. Indonesia is a good example, despite the global financial crisis its investment flows have remained strong and GDP growth has also been up.
Encouraging FDI is tough. We live in a capital constrained world. And as developed countries come out of recession it will become more constrained.
The challenge is to create the proper environment to ensure government policy is not a barrier to growth. SD has an op-ed on the subject today looking at the institutional barriers in Indonesia and also looking at recent evidence and examples that highlight the challenge. The article is available here.
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