Wednesday, September 28, 2005


Gave a small talk in Aceh yesterday, regarding the "reconstruction and rehabilitation". My remarks are as follows:
  • It is the right momentum to redevelop Aceh. Almost all needed sources are there. The exception, however, should be taken more seriously. It includes: accountable aid management, soft infrastructure, property rights system, and the balance between regulation and rooms for the locals to decide what's good and what's bad for them.
  • That said, I tried to encourage the community not to rely completely on Jakarta. ("Acehneses knows themselves way better than anybody else").
  • We're in the search for good property rights system. And that does not have to be dictated by central govt -- some systems might even have been existent already. Basically, the central government (or, local government for that matter) is needed only for their role in advocacy. ("We don't need to kick out big corporations. We need to use them. But in order to level the negotiation field, we might need advocacy -- that can come from the government or NGOs).
  • Do not get trapped in the "poverty trap" assertion. The naive "Big Push" era in Rosenstein-Rodan's sense is over (as opposed to Murphy-Shleifer-Vishny's "big push" interpretation that look more on the institutional dimension). No matter how much money you get to boost up investment, if soft infrastructure is not ready, it all goes to consumption. (By "soft infratructure" I mean institution: political system and the people running it as well as the legal framework, and of course ability to adopt technology).
The discussion was good. In fact I enjoyed talking with the Aceh people. They're very open-minded. (Frankly, I was sort of expecting typical NGO-like resistance to economic solution -- as it turned out, this was way better).

Note: Just found out that the latest Economists' Voice contains two articles related to city redevelopment -- in this case New Orleans vs Katrina (one by env-economist Bob Hahn and the other by the ever-smart Ed Glaeser). Check them out (subscription required).

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