ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Indonesia From Ascent to Decline

Sunanda Sen THE collapsing economy of Indonesia bears testimony to the plight of a national economy in the process of its integration with international markets. In particular, the outcome has revealed the emptiness of the claims of conventional macro-policies which depend on financial intermediation as a major propeller of output growth. In terms of such beliefs, deregulation of finance sets the necessary preconditions for an efficient allocation of credit by means of financial intermediation. The flow of credit, in this set up, is expected to be accommodative and not repressive when backed by output growth. Stories as above are today hard to believe, especially as a part of Asia (which so far earned the rating as success stones of the market) plunge today into the most severe economic crisis of the post-war years.

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