The Soeharto Era in Indonesia

I believe that Indonesia is an example worth mentioning regarding growth under extractive institution and the persistence it has caused in Indonesia's subsequent development. So to cut the long story short, Soeharto, the second president of Indonesia, led the country using extractive institution where the hand of military reached into every level of society to establish political centralization. Though many human rights were abused under this institution, Indonesia experienced a stunning economic progress during which poverty was cut from almost 60% of the population when Soeharto took office in 1968 to 13% in 1997." Furthermore, Indonesia's economic growth was so rapid that she became one of the eight "high-performing Asian economies" in the early 1990s. Unfortunately, growth under extractive institution in Indonesia suffered the same fate as that in Soviet Union because the great income and social disparity between the elite and the impoverished rendered by the nature of the institution caused a brutal mass riot in May 1998 during which Soeharto's throne was thrown off.

After the riot, Indonesia has been trying to move towards a more democratic system. Unfortunately, many leaders elected in the parliament have instead embezzled the nation's money and misused their political power to build their own wealth by cooperating with few elites. Hence, there has been a reluctance in moving towards inclusive political and economic institution in Indonesia.