Indonesia Vs. Congo (DR): Economic performance
My dependent variable is economic performance which can be perceived as a country’s status in relation to its economy. While focusing on this dependent variable, I will be looking at both Congo and Indonesia as I try to identify ways in which the economic performance from both countries can be compared relative to each other in relation to democracy and stability.
Indonesia has been experiencing a financial crisis during the year 1997 and this greatly affected the nation’s financial budget for the year 1998/1999. The financial crisis was attributed by the debts which had been incurred by the private sector and had been made worse by the loss of the nation’s currency value. According to a report published in the year 2000, the Central Bureau of Statistics in Indonesia made a prediction based on the fact that the Gross Domestic Product would greatly reduce in the country during that year by an estimate of 10.1% due to stagnant prices which had been in existence since the year 1993 (Asian Info, 2000).
Congo has also had its ailing economic growth prior to the year 2003 which was largely caused by political instability which paralyzed most of the economic activities and consequently affecting economic growth. Since the year of 2003, the country has been stable and has subsequently enjoyed a steady economic growth. However, fluctuations are evident all due to political instability and lack of democratic liberty (Emporiki Bank, 2010).
Several sectors were affected by this difficult financial situation which could otherwise be termed as a recession. These sectors that were widely affected included the construction industry, the manufacturing as well as the service industry. However all was not lost as there were some sectors which continued to do well and obtain positive growth. The agricultural industry as well as necessities such as gas, electricity and water, were not affected by the country’s recession (Asian Info, 2000).
It is very clear that when a country was experiencing a recession, it was coupled with inflation which substantially affected the consumer price index and subsequently resulting into its increase. The inflation situation during the year 2000 was greatly affected by the long-term monetary crisis and had been heightened by poor harvests and escalated prices in fuel. Prices for food, housing, clothing, transport and communication, health, education and recreation had also elevated as a result of the inflation (Asian Info, 2000).
Indonesia has not been stable in as far as exports and imports are concerned as there have been waves of fluctuation in both imports and exports at different times. This fluctuation is however due to a variation in outcomes yielded from various economic activities as well inadequate resources to enhance economic growth. The current situation now in Indonesia is promising and is expected to continue in growth and progress. Compared to Congo, the economic performance is unpredictable as the country is politically unstable and at any minute a local conflict can break out which can consequently affect ongoing economic activities.
The situation of Indonesia’s economic performance in the 1998/1999 budget year created a need for a reformative action which would save the country from its financial crisis at the moment.
The effects of the reformative process have been felt since the year 2004 when the country’s economic growth has been on a steady rise. In reference to the 2008, both countries experienced economic growth but at differing rates as Indonesia experienced an economic growth of around 5.5% (OECD, 2008) while Congo was enjoying its 5.7% (African Economic Outlook) economic growth. However, this kind of growth in both countries is not yet enough to ensure that they are free from the claws of poverty.
The current economic situation in Indonesia can be seen as an improvement contrary to the crisis that was evident during the late 20th century which saw the country’s inflation rate rise markedly. Now the economic situation has substantially improved and it is quite evident that the country has done much to liberate itself from an economic recession as evidenced in the years 1997-2000. Right now as demonstrated by OECD, 2008, the private sector is back on track and investments are on the increase despite the fact that it is yet on the lower side when compared with the Gross Domestic Product (GDP).
Prices in commodities have gone up and this has greatly supported export growth. Unfortunately, it is still difficult to minimize poverty rates and unemployment. Economic performance in Congo has been low as evidenced by a 2010 report by African Economic Outlook. The economic performance of Congo in regards to economic growth has been fluctuating whereby in the year 2007, the economic growth fell at 6.3 and in the year 2008, it was down at 5.7. This went hand in hand with inflation which increased from 16.7% in 2007 to 26.2% in 2008. Economic growth in Congo has been affected by the amount of owned finances by the government (African outlook, 2010).
Congo has not had a good reputation in as far as good governance is concerned thus it became difficult for it to become part and parcel of a certain programme as agreed with the International Monetary Fund that was aimed at reducing poverty and facilitating economic growth. With this occurrence, the country did not arrive at a completion point which would have seen to it that the country reduced its debts to Chinese countries (African Economic Outlook, 2010).
Having a decentralized government enables Indonesia to distribute resources fairly and subsequently avoiding the fact that they could be concentrated on one major area. Amendments in as far as improvements in the economic sector are made result from an agreement and there is no evidence of a dictatorial king of rule to govern the country in all its facets including the economic session. The political climate in Congo has not been a stable one and in the year 2008, there was a change of governance that was accompanied by several riots which yielded negative effects. I would therefore rank Indonesia at a higher level as compared to Congo whose efforts are always affected by the unpredictable political climate (African Economic Outlook, 2010).
Indonesia has a population of about 2.4million people. This population has been on the increase with the highest increase being recorded between 2003 and 20004. Globally, the population forms one-sixth of the total population. The country is strategically placed in Oceania with Jakarta as the capital city. It comprises of 17, 508 Islands and borders Malaysia, East Timor and Papau New Guinea (Booth, 1998). The country’s largest population is made up of Muslims though all religions are well represented. The combination of the population in regard to religion are 1% Buddist, 1% all other religions, 2% Hindu, 3% Roman Catholics, 5% protestants and 88% Muslims. The president and the legislature are elected (Feith, 1962). Indonesia forms an important trade region where it engages in international trade. However, trade has not been flourishing rapidly due to rapid economic changes over the years, corruption, continuous natural disasters affecting the area, democratization process and separatism.
Indonesia consists of persons from diverse religions, languages and ethnicity. The national motto has played a big role in ensuring unit among the citizens as it takes advantage of the diversity for a common growth. Though the country has a large area covered by biodiversity, it still ranks one of the highest in poverty due to the above named problems (Van der Eng, 2002). The country is continuously faced with high rates of economic and social inequality, malnutrition and number of persons that are landless.
Congo is a republic located in Western part of Africa on Congo’s Eastern boarder. The country is known for its richness in the natural resources including copper, cobalt and diamond. In addition, the country has oil reserves on its onshore though it is yet to exploit this. The economy has been on the decline since the year 1950 mainly due to previous wars experienced in the area. However, this is not the only cause for the economic down turn experienced in the country. Other challenges tat need to be addressed if the country is to make any positive growth include high rates of corruption, poor infrastructure, economic policies that are not open, and legal systems that have remained inoperative. Congo does not experience continuous natural disasters as Indonesia does but the other challenges have proved to have very negative effects. Each person, especially those in the leadership, works to fulfill personal ambitions without considering the impact of their actions to the wider society.
The World Bank has continuously held meetings with the government but all stakeholders must be involved to make impact and achieve the desired change. The country’s population is made up of people from different ethnicities and languages but is blended by the use of French as the national or common language. 70% of the total populations are Christians with the remaining population being made up of persons who affiliate to traditional rituals and beliefs. The political systems have been mainly dictatorship with Kabila taking his position by force.
Unlike Indonesia which is densely populated, DR Congo is sparsely populated in reference to its total and coverage. The expectation is that the economic performance of the country would be better to that of Indonesia but this is not the case. DR Congo has been unable to earn foreign income through international trade hence relying on the government to print its money for use in the spending. As a result, the county has not met the international standards hence remaining locked out of international trade. The country also relies on fishing and forestry which provide timber used in commercialization. However, the forests are almost depleted hence a threat to the economy. To facilitate economic growth, the government has recognized the need to change the taxation system for the products. There is also an urgent need to plant trees so as to prevent complete depletion of the resources. The two countries have a similarity in that they both experience high rates of corruption that pull them behind and result to high poverty rates.
References
Booth, A. (1998). The Indonesian Economy in the Nineteenth and Twentieth Centuries. A History of Missed Opportunities. London: Macmillan.
Van der Eng, P. (2002). Indonesia‘s Growth Performance in the Twentieth Century. In The Asian Economies in the Twentieth Century, edited by Angus Maddison, D.S. Prasada Rao and W. Shepherd, 143-179. Cheltenham: Edward Elgar,
Feith, H. (1962). The Decline of Constitutional Democracy in Indonesia. Ithaca, New York: Cornell University Press.
Hill, H. (2000). The Indonesian Economy. Cambridge: Cambridge University Press,
Emporiki Bank. (2010). Country Trading Profiles. Retrieved on 2010, February 17 from http://www.interex.gr/uk/countries-trading-profiles/democratic-republic-of- congo/presentation
OECD. (2008). Economic Assessment of Indonesia 2008: Growth Performance and Policy Challenges. Retrieved on 2010, February 17 from http://www.oecd.org/document/53/0,3343,en_33873108_39418603_41014965_1_1_1_1,00.html
Asianinfo. (2000).Indonesia’s Economy: Economic Growth and State Finance. Retrieved on 2010, February 17 from http://www.asianinfo.org/asianinfo/indonesia/pro-economy.htm
