Fiscal decentralization in Indonesia: A comment on smoke and lewis

In World Development Smoke and Lewis (1996) describe a local government capability rating effort in Indonesia, and conclude that this approach to decentralization has great potential. Their analysis is bound to a limited set of central level actors, and thus reflects only part of the decentralization debate in Indonesia. Consequently the authors miss the roots of this purportedly “new” approach and overestimate its actual or possible effects. Smoke and Lewis have also not taken into account the importance of a vastly different approach to decentralization, the regional autonomy pilot program, which was inaugurated by the Indonesian Government in April 1995. Providing the broader context to the rating effort, we try to reveal its conceptual and practical limitations and point on the ambiguous role of the rating effort in the decentralization arena in Indonesia.     

Trade Specialization in Latin America: The Impact of China and India

This paper examines the extent to which the growth of China and India in world markets is affecting the patterns of trade specialization in Latin American (LA) economies. We construct a measure of Revealed Comparative Advantage (RCA) by 3-digit ISIC sector, country, and year. This RCA accounts for both imports and exports. The empirical analyses explore the correlation between the RCAs of LA and the two Asian economies. Econometric estimates suggest that the specialization pattern of LA—with the exception of Mexico—has been moving in opposite direction to the trade specialization pattern of China and India. Labor-intensive sectors (both unskilled and skilled) probably have been negatively affected by the growing presence of China and India in world markets, while natural resource and scientific knowledge intensive sectors have probably benefited from China and India’s growth since 1990. JEL no.  F10, F14