POS 485_ASU_ASSIGNMENT 2024_WEEK 5_AFTER THE WASHINGTON CONSENSUS THE EMERGENCE OF INSTITUTIONAL THEORY

AFTER THE WASHINGTON CONSENSUS: THE EMERGENCE OF

INSTITUTIONAL THEORY

ARIZONA STATE UNIVERSITY

POS 485 - POLITICAL ECONOMY

WEEK 5

4.1.

Introduction:

Before discussing the theory of institutions as the current dominant theory in

development discourse, it is worth discussing what institutions are.

This textbook will explain after the Washington consensus: the emergence of

institutional theory. In full, this textbook in chapter 4 explains the following:

New Institutionalism as an Approach

Institution Theory in the Discourse of Political Economy of Development

How to create inclusive economic institutions?

OECD Perspectives on Inclusive Institutions

After studying this chapter 4 textbook, students are expected to understand these three

concepts to explain the emergence of institutional theory.

4.2

Presentation:

4.2.1.

New Institutionalism as an Approach

There are three types of new institutionalism theoretical approaches: historical

institutionalism, rational choice institutionalism and sociological institutionalism. The term

new institutionalism was coined by March and Olsen (Marsh & Stoker, 2010, p.63). The

emergence of The new institutionalism in political science popular in the early 21st century is

the revival of institutions as the focus of political science as well as economics. At the

beginning of the old study of politics institutionalism was criticized as non-science by

behaviorist approach scholars. The old institutionalism of politics was assumed to be the

study of "what should be" rather than "what is". In other words, old institutionalism tends to

be normative, legal formalistic in its study. Thus, new institutionalism was reborn with the

same focus as the old intuition in studying institutions, but with a what is perspective. The

new intuitionism is a synthesis between the old institutionalism approach that focuses on

intuition and behaviorism where the focus is on individuals as political actors (Peters, 1999).

Another perspective describes rational choice institutions in relation to the economic

theory of institutions. According to this viewpoint actors act to maximize utility in response to

incentives triggered by institutions (Peter, 2012, 52-553). Nonetheless, individuals are

products of institutions and can change their institutions (Chang, 115). The latter perspective

in viewing institutions based on rational choice believes that institutions are individuals

within institutions (Peter, 2012: 55-56). However, this latter meaning of focusing institutions

with individuals to get the most benefit from institutions tends to close the theory of rational

choice rather than new institutions. Another major approach is the new history of institutions.

This approach is the dominant perspective in comparative politics (Capoccia, 2016, p. 1096).

4.2.2.

Institution Theory in the Discourse of Political Economy of Development :

After the death consensus/agreement Washington, several alternative agreements have been

discussed to find the best formula for economic growth and development. There are many

differences among the new candidates, but the things that these alternatives have in common

are; first, put emphasis on institutions and second, emphasize the importance of specific

reforms rather than a laundry list as the Consensus had done. Washington finishes. This

section will explain the emergence of institutional theory, which will be discussed

chronologically.

The first alternative after the Washington Consensus was by Kuczynski and Williamson

(2003). It contained reforms under four central directions as they called it the "New

Washington Consensus":

Stabilize the macroeconomy to avoid a crisis.

Complete liberalization and privatization including trade reform in developed countries.

Institutional building including national innovation systems, judicial and civil service reform,

teachers' unions, financial sector regulation, property rights, political reform.

Build the assets of the poor, through education, microcredit, land reform and asset titling.

Furthermore, Dani Rodrik (2006) also provides some directions as an alternative after

the end of the Washington Consensus. She calls it "The Addition of the Washington

Consensus. He modified the Washington Consensus with the emergence of institutional

reform as a significant new heading. He lists cooperative governance and anti-corruption as

part of the institutional reforms that governments should adopt for development.

On the other hand, in 2004, Joshua Cooper Ramo (2004) promoted the idea of the

Beijing consensus. He argued that China's economic development model after Mao was a

good experience that other countries should apply in addition to the Anglo-Saxon reforms

promoted by the US and UK with the Washington Consensus. There are four key elements of

policies that he promoted based on the opposite of the Washington Consensus. First,

innovation-led growth by emphasizing technological innovation and going straight for world-

class technology. Second, emphasizing on sustainability and equality and rejecting per capita

GDP. Third, an emphasis on self-determination and strategic power by actively seeking

independence from external pressure, as it is coerced by "egemonic" powers such as the

United States (Ramo, 2004: 12). Fourth, a willingness to innovate and experiment, the Beijing

Consensus still holds fast to its pragmatic notion that the best path to modernization is one of

-looking for a stone to cross the river,‖ instead of trying to make one big -shock therapy leap‖

(Ramo, 2004, p. 4). However, because of "looking for a rock to cross the river", Ramo's

article is not very clear in terms of the rigid policies that developing countries should follow;

there is still a general sense that the Beijing Consensus is just that, the Washington Consensus

is wrong.

In an institutional sense, Ramo even promotes authoritarianism over democratic

systems. Furthermore, Halper (2012) argues that the Beijing Consensus could be a kind of

model for legitimizing authoritarian systems rather than promoting development. However,

Ambrosio (2012) finds that concerns about the early stages of an anti-democratic 'back wave'

as a result of the emergence of the Chinese model of the Beijing Consensus are overstated. At

present, there does not seem to be a significant shift in favor of the authoritarian capitalism

model. However, a serious flaw with this Beijing Consensus criterion is that the Beijing

Consensus assumes the fact that some countries have good development. Without

transparency and participation (deliberative process) like China's For example. China is a

good economic model without transparency and popular participation. However, the fact that

China is a good model for other countries may need to be questioned when we look at what

happened in the collapse of the Soviet Union. The Soviet Union had a very good economic

performance in the era after World War 2, but this performance later did not last due to the

lack of inclusive institutions. Another model based on the East Asian experiment was also

conducted by Lee and Mathews which they called the Beijing-Seoul-Tokyo Consensus or

BeST Consensus (K. Lee & Mathews, 2010, p. 86). The principle of this consensus is its

emphasis on capacity building, on dynamic transition from one stage to the next, and on

building institutional platforms to catch latecomers'.

Subsequently in response to the Washington Consensus critique, the World Bank

published a report on strategies for sustainable growth and inclusive development

(Commission on Growth and Development, 2008). This report was conducted by 21 leading

economists including two Nobel laureates, Robert Sollow and Michael Spence, former

Indonesian Vice President Boediono, and former Singapore Prime Minister Goh Chok Thong.

They argue that it is neither necessary nor sufficient to list policies or conditions for growth,

but commissioners have a keen understanding of the policies that may be essential.

"Governments should focus their efforts where it yields the greatest growth returns, but

"suspect that over 10 or 20 years of rapid growth, all these ingredients will matter."

(Commission on Growth and Development, 2008, p. 33). These are the ingredients for a

growth strategy.

The commission also provided a list of bad policies that the government should avoid,

namely:

Energy subsidies

Using civil service to expand employment

Reduce deficit by cutting infrastructure

Provides open protection

Price controls to combat inflation

Banning exports to keep prices low

Fighting urbanization

Ignoring environmental problems at an early stage, neglecting the quality of education,

underpaying civil servants, poor banking regulation, and excessive direct control, excessive

appreciation of the exchange rate. (Commission on Growth and Development, 2008, pp. 68-

69)

There are several ingredients according to this report that contain institutional reforms

such as equity and equality of opportunity (point 12), effective governance (point 15), and

high-quality debate (point 16). However, if we compare between the ingredients of the

Growth Commission and the Washington Consensus, we will see that there are not all

different. Some new items have been added and some of them excluded. The most important

change is the emergence of economic and political institutions namely; first, redistribution by

the government into common access to health and education, and a system of meritocracy.

Second, the Growth Commission took environmental issues seriously. Third, there were

important recommendations to fight corruption. Finally, the Growth Commission became an

important factor for the state for deliberative processes of policy-making such as public

debates.

Overall, although extensive consensus has been reached on institutions (with the

exception of the Beijing Consensus), no single consensus has served as an ethnic link to

institutions. For example, the New Washington Consensus, Dani Rodrik, Barcelona

Consensus, BeST Consensus and Growth Commission have all mentioned the important role

of institutions such as national innovation systems, judicial reform and civil service, financial

sector regulation, property rights, political reform, anti-corruption. However, it does not

mention the role of ethnicity and ethnic relations in developing good institutions.

Acemoglu and Robinson (pp.118-120) state that inclusive economic institutions

comprise; secure features of private property, an impartial legal system, and the provision of

public services that provide a level playing field where individuals can exchange and make

contracts. It should also permit the entry of new private sectors and allow individuals to

choose their professional occupations. In contrast, exclusionary institutions refer to

institutions designed to extract income and wealth from one part of society to benefit a

different subset, lacking law and order, entry barriers and regulations that prevent the

functioning of the market and create a non-level playing field.

Furthermore, inclusive political institutions are those that allow for broad participation

or pluralism and place limits and checks on politicians. In contrast to inclusive ones, exclusive

institutions mean absolutism when power is in the hands of the few without a system of

checks and balances and rule of law. The two tables below summarize the ideas of Acemoglu

and Robinson's theory of institutions.

4.2.3.

How to create inclusive economic institutions?

Acemoglu and Robinson (2012, pp.124-129) go on to argue that economic institutions

are created by society with politics as the process by which society makes the policies and

laws that will govern them. If the politics are inclusive, then it will create inclusive economic

institutions as well. On the other hand, political institutions can be extractive (2012).

Creating inclusive and extractive economic institutions. In addition, Acemoglu and

Robinson argue that higher economic growth will not sustain institutions by combining

extractive political institutions and inclusive economic institutions as in China since Deng

Xiaoping. China before Deng had extractive political and extractive economic institutions.

Since Deng, China has changed its economic institutions from extractive to inclusive

economic institutions, but the political institutions with extractive political institutions (one-

party system) have not changed, consequently according to Acemoglu and Robinson, this

kind of combination will not sustain economic growth. That combination also happened in

South Korea under General Park.

Unsustainable economic growth can also occur in a combination of extractive economic

and political institutions such as Barbados and the Soviet Union. The Soviet Union, for

example, had a good economy in the early years of their era but then collapsed, with some

even predicting the PutSoviet takeover of the US economy:

"Until 1977, a leading economics textbook by a British Economist argued your Soviet-style

economy was superior to a capitalist economy in terms of economic growth, providing full

employment and price stability and even in producing people with altruistic motivations. Poor

old Western capitalism succeeds better only in providing political freedom. The most widely

used university textbook in economics, written by Nobel Prize winner Paul Samuelson,

repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961

edition, Samuelson predicted that Soviet national income would overtake that of the United

States perhaps in 1984, but probably by 1997"

Furthermore, they argue that decentralization is one of the factors that can develop

extractive economic and political institutions. They argue that political centralization (not

decentralization) is necessary to create inclusive economic institutions (Acemoglu &

Robinson, 2012, pp. 125-126). This is because political power has long been widespread in

decentralization, whereas there is no authority that can control or sanction anyone. As a result,

under these circumstances it is difficult to create inclusive economic institutions. What

happened in Somalia is an example of why decentralization is a disaster for economic

institutions because of the lack of authority caused by decentralization.

In contrast, in the case of the United States and South Korea, the US and South Korea

not only have pluralistic politics but are also fairly centralized and powerful states even

though the US is the most powerful country in the world federal states. As a result, inclusive

economic institutions in these countries are easier to establish.

However, Acemoglu and Robinson's study did not attempt to consider the long-term

impact of ethnic polarization on institutions in their work. This is what this study aims to

address. This research would have been more relevant if the various factors that can have an

impact in making institutions inclusive were explored. In addition, it also ignores the impact

of indigenous factors such as geography, ethnicity and culture as "moderator variables"

between institutions and development. Their argument relies too much on a linear cause and

effect analysis of development implications. "The current dominant discourse on institutions

and development fails to recognize that the relationship is not linear, differs across societies,

and changes over time even within the same society" (Chang, 2011, p. 481). There are many

factors that can influence the process of forming the inclusive institutions they propose.

Furthermore, Acemoglu and Robinson (2012) provide some examples of countries that

have inclusive institutions, both political and economic institutions. However, these countries

are relatively homogeneous countries. For example, the US is dominated by white Americans.

Another example is South Korea. South Korea is a very homogeneous country with the

Korean ethnic group accounting for about 96 percent of the total South Korean population.

Japan, Taiwan, Germany, France and the Scandinavian Countries are also similarly

homogeneous countries in terms of ethnicity. In contrast, Indonesia as the object of this study

is a heterogeneous country with 300 ethnic groups with more than 700 regional languages.

The dominant ethnicity in Indonesia is Javanese, which makes up 40 percent of the total

population. The different background of Indonesia as a multi-ethnic pluralist country is the

main motivation for this research to evaluate the theory of inclusive institutions in a

heterogeneous country setting.

4.2.4.

OECD Perspectives on Inclusive Institutions:

Another definition of inclusive institutions is provided by The Organisation for

Economic Cooperation and Development (OECD). According to OECD (2014), the criteria

for inclusive institutions are:

First, inclusiveness in the policy cycle means providing opportunities for people to

contribute to and influence policies. Secondly, citizen engagement in open access to

information or government is also necessary. Furthermore, inclusive institutions go beyond

elections and legislative representation. Accountability involves citizens having access to

information as well as engaging in public debate.

Third, access to information also extends to public budgets. Traditionally, the budgeting

policy-making process has been complex and opaque, with some key decisions made

internally within the government administration. More transparent and inclusive institutions

should allow budget choices to become visible to citizens and other stakeholders.

Fourth, creating a policy-making process with mechanisms to protect the public interest

and control the influence of money and undue power is important for fairness in the public

policy-making process. Such institutions should make the government proactively address

important areas that relate to the public and private sectors, including lobbying, conflicts of

interest in public decision-making, and the influence of private interests exercised through

political financing (rent-seeking agencies).

Fifth, decentralization, which has been seen as a method of empowering communities,

by bringing policies that affect their conditions closer together.

The OECD and World Bank also highlight the impact of certain institutions such as

regulation to better development. They also advocated the idea of regulatory reform. The term

for measuring the quality of regulation in order to achieve good governance came to be

known as Regulatory Impact Assessment (RIA), a systematic method for evaluating both

positive and negative impacts of current regulations as well as the potential impacts of

proposed new regulatory measures. The aim is to explain the objectives of the proposal, the

regulations that need to be addressed and the possibility to deliver the objectives have risks.

In doing so it should make transparent the expected costs and benefits of the options for

the different stakeholders involved, such as government and small businesses, and how

compliance with the regulatory options will be secured and enforced. The assessment should

be multidisciplinary and consider the economic impacts, environmental factors, social costs

and distributional consequences of ordinance actions (Jacobs, 2005, HLM. 2) In a short

sentence, regulatory impact assessment is a method of policy analysis that can assist

policymakers on the design, implementation, and monitoring of improvements to the

regulatory system by providing a methodology for assessing the consequences of new and

existing regulatory arrangements (Peci & Sobral, 2011, HLM. 206).

In addition, in European countries, RIA has emerged in the political agenda of the

European Union (EU) member states. RIA is the cornerstone of the program for better

regulation and governance (Radaelli, 2005, HLM. 824). According to the European Union

(EU), there are several cores required for RIA implementation (EU 2004, HLM. 11, cited by

Peci & Sobral, 2011, p.206), including:

Precise problem definition and identification Policy objectives to avoid vagueness, ambiguity,

and contradiction (with expected outcomes expressed in quantitative, physical terms and

explicit hierarchy between objectives)

Start the assessment while the options are still open and consider multiple choice.

Information gathering may be through consultation and data assessment, with an explicit

choice of relevant criteria, procedures and techniques for selecting a particular set of

information.

Ex ante impact assessment of each relevant option, through some explicit and consistently

used method; description and most of the time calculation of effects; and explicit selection of

the types of effects to be considered.

RIA results are disclosed and published thoroughly and transparently, namely regarding

transparency and development.

Another important aspect of development is transparency. Several works have

demonstrated the relationship between governance transparency and development. Most of

the literature shows a significant influence on both variables. More transparent governments

are better at development. Others also argue that transparency is necessary for better public

trust regarding development.

The basic idea that transparency is good for development especially for economic

development can be identified from occupational information and behavioral economists who

pay attention to the idea of well-informed economic actors for the market to work perfectly.

Some of Joseph Stiglitz's works on asymmetric information and Herbert Simon's bounded

rationality suggest that markets are ineffective as Adam Smith's invisible hand of the perfect

free market has been put forward due to these factors. As a result, open information is a basic

necessity for economic efficiency (Arnott, Greenwald, & Stiglitz, 1994). In addition,

government intervention is necessary to achieve economic efficiency due to market failures

caused by asymmetric information and rationality constraints. The type of policy instrument

of government intervention is open information governance between the government itself,

the market and civil society organizations.

In the policy-making process, transparency is required to make effective policies. A

study by Fung, Graham, & Weil, (2007) and Fung, Mary, & Weil, (2003) showed that

transparency is necessary for stakeholder interaction in government to achieve effective

policies. In terms of public services, increased transparency can lead to improved public

services according to Kosack & Fung, (2014). The potential for transparency to drive

improvements in areas such as health care outcomes and education quality, leading to

improved capacity and citizen well-being‖ (Kosack & Fung, 2014, p. 84).

In the context of Asian countries, a study by Kim (2010) for example, looked at the

relationship between transparency and government trust in two Asian countries; Korea and

Japan. He concluded that government performance in the economy, control of political

corruption, quality of public services, crime, and attention to public participation and

engagement were strongly associated with broad public trust in government in Japan and

South Korea. However, this theory does not fully explain what the relationship is between

government performance in the economy and transparency in government. This work focuses

on the variables of transparency and trust.

The main reason for transparency and accountability is the fight against corruption. The

World Bank and IMF advocate this issue as their main campaign. For example, Agustín

Carstens (2005), former Deputy Managing Director of the International Monetary Fund,

argues that apart from trust issues, transparency is an important factor in the fight against

corruption. In the context of oil-rich countries, he argues that transparency and accountability

are essential to ensure that resource wealth is managed for the benefit of all the people.

Transparency in oil sector operations allows deliberative democracy to work on how oil

resources should be managed.

However, the studies reviewed so far do not address the issue of ethnicity's relationship

with government transparency and accountability. Kim, for example, studied the impact of

transparency on public trust in relatively homogeneous countries in Asia. Some of Fung's

work does not consider the impact of ethnic relations on government willingness to disclose

information. Behavioral economists are only concerned with the inability of economic actors

to access information for rational decision-making, and they still assume that humans are

rational.

4.2.5.

Participation and Development:

As mentioned earlier, participation is part of the inclusive governance required for

better development. Several scholars as well as international organizations have advocated the

impact of public participation or public involvement in public policy making on development

issues such as public provision and economic performance. Other scholars have also argued

that participation is essential for public trust.

In political science, the idea of participation is related to the idea of deliberative

democracy. As a critique of representative democracy, advocates of deliberative democracy

highlight the importance of citizen participation (including civil society engagement) such as

public hearings, opening public shares for debate among stakeholders or policy networks. The

form of participation according to this view is not only the number of voters in elections to

choose their representatives in parliament, but also how the state opens a deliberative process

in public policy making between civil society and the government (Hendriks, 2006, Dryzek,

2000).

Scholars often argue that participation has positive outcomes on people's satisfaction

with political outcomes and the legitimacy of procedures (Traber, 2013, p. 60). For example,

Olken's (2010) study in Indonesia looked for the relationship between the variable

participation and community satisfaction variables in 49 villages in Indonesia with a

quantitative experimental research method. He found that direct participation in the public

policy-making process can significantly increase satisfaction with the project and government

legitimacy.

Other scholars such as Joseph Stiglitz (2002, p. 163) also argue that the relationship

between democracy and growth is positive not a trade-off, consensus building, open dialogue

and the promotion of an active civil society are key ingredients for long-term sustainable

development. In addition, international organizations such as the World Bank have also made

the importance of participation for development their major campaign. In the World Bank's

2004 report (World Bank, 2004), this Bretton Wood institution reported that: Increasing poor

clients' choice and participation in service delivery will help them monitor and discipline

providers. Increasing the voice of the poor, through ballot boxes and widely available

information, can increase their influence with policymakers and reduce the diversion of

public services to the non-poor for political patronage. By rewarding effective service

delivery and penalizing ineffective ones, policymakers can get service providers to better

serve the poor. (World Bank, 2004, p. 1) However, the perspective in looking at the

relationship between participation and economic development is not the only important point

of view. There is still room for some debate.

Another opposing perspective argues that Deliberative democracy with participation is

an impediment to economic growth and development. Participation in policy-making of the

deliberative democracy model may disrupt political stability and in the long run may result in

a decline in economic development. Chinese leader Deng Xiaoping had a famous slogan, It

doesn't matter whether the cat is black or white, as long as it can catch mice‖. From this

adage we can conclude that democracy or Any authoritarianism is unnecessary, and the most

valuable thing is as long as it can realize prosperity.

In the policy studies point of view, such systems focus on models of participation and

debate about the process rather than the main goal of policy (welfare) as a result of a rational

technocratic decision-making process. In addition, to criticize western liberal democracy, Lee

Kuan Yew also claimed that Asian Value Democracy is a type of democracy in Asia that

promotes harmony and stability rather than debate and conflict as western liberal democratic

models do (Zakaria & Yew, 1994).

Another problem with the participation model is its practical difficulties. The bottoms

up model with its paradigm of pluralism is too optimistic about the possibility of equal

participation. Some groups or policy communities may be more dominant in power than

others in the policy process (Bevir, 2009, p. 5). Although in a democratic state system, an

individual actor such as a businessman may be more dominant than a political party or civil

society in influencing the decision-making process. For example, the studies of Robison and

Hadiz (2004) and (V. R. Hadiz & Robison, 2013) in Indonesia, argue that although Indonesia

has transformed from an authoritarian regime to a democracy, in reality, there is still an

oligarchic Political Economy of Development from the global to the Indonesian context

groups from the authoritarian regime. Then, these groups are more dominant in power. In

short, the ideal model of participatory policy-making is difficult to practice due to unequal

power in the policy community.

4.3.

Summary:

How to create inclusive economic institutions Acemoglu and Robinson argue that

economic institutions are created by society with politics as the process of society making

policies and laws that will govern them later. If the politics are inclusive, then it will create

inclusive economic institutions as well. Create inclusive and extractive economic institutions.

Moreover, Acemoglu and Robinson argue that higher economic growth will not sustain

institutions by combining extractive political institutions and inclusive economic institutions

as in China since Deng Xiaoping.

Political centralization is necessary to create inclusive economic institutions. This is

because political power has long been widely dispersed in decentralization, whereas there is

no authority that can control or sanction anyone. As a result, under these circumstances it is

difficult to create inclusive economic institutions. What happened in Somalia is an example of

why decentralization is a disaster for economic institutions because of the lack of authority

caused by decentralization. According to the OECD's Perspective on Inclusive Institutions,

more transparent and inclusive institutions should allow budgetary choices to be real to

citizens and other stakeholders. Fourth, creating a policymaking process with mechanisms to

protect the public interest and control the influence of money and undue power is important

for fairness in the public policymaking process. Such institutions should make the government

proactively address important areas that relate to the public and private sectors, including

lobbying, conflicts of interest in public decision-making, and the influence of private interests

exercised through political financing. Fifth, decentralization has been seen as a method of

empowering communities, by bringing policies that affect their conditions closer together.

4.4.

Task/Exercise/Experiment:

•

State the impact of public participation in public policy making on development issues such

as public provision and economic performance.

•

Explain why decentralization is one of the factors that can develop extractive economic and

political institutions. They argue that political centralization (not decentralization) is needed

to create inclusive economic institutions.

•

List the criteria for inclusive institutions according to the OECD (2014)

•

Explain why transparency is good for development, especially for economic development

Ethnicity and Development

5.1.

Introduction:

In this discussion, there are three main approaches; primodialism, instrumentalism and

constructivism in the study of ethnicity, each of which will be explained comprehensively.

This textbook will explain the concept of Ethnicity and Development. In full, this

textbook in chapter 5 explains the following:

Primordialism in ethnic studies

Constructivism in the study of ethnicity

Instrumentalism in the study of ethnicity

Conceptualizing Ethnicity and Ethnic Polarization

Ethnic Polarization after Regime Change

Inclusive Institutions and Ethnicity

Impact of Ethnic Polarization on Institutions

Tribes and Institutions in Indonesia

After studying this chapter 5 political economy of development textbook, students are

expected to understand the 8 (eight) concepts that support the concept of ethnicity and

development.

5.2.

Presentation:

5.2.1.

Primodialism:

Primodialism theory, which views ethnicity as natural or given based on one's birth

from an ancestral gene pool or shared cultural connections, centers on the origin and

durability of ethnic identity (Rudolph, 2006, p.4). Primodialism argues that the real and

ancient concept of ethnicity promoted by Geertz (1963) (1973) and Weber (1980 [1921]).

Besides Geertz, other scholars who use the primodialism approach are Rabhuska and Shepsle

(1972). The primodialism approach to ethnic origins received some criticism from other

approaches such as constructivism and instrumentalism.

For example, Abner Cohen (1974 cited in Eriksen, 2010) argues that ethnic identity

develops as a reaction to functional organizational requirements. He argues that ethnicity is a

particular form of informal politics, an organization in which cultural boundaries are drawn so

that group capitals or -symbolic capitals‖ can be protected. In a similar vein Hale (2004,

p.459) states that:

"Although identities are found to be inherently situated and ever-changing, the concerns of

primodialists, never "much". Moreover, what counts as identity actually sometimes "ages"

and can resurface, as primodialist instincts do. I would argue that this perspective does not

help to shed the label."

The idea of ethnicity given as a concept in the perspective of primodialism is rejected

by the constructivism approach. Bayar, (2009, p.1640) summarizes constructivism's critique

of primodialism: first, the instability of ethnic identity in specific places such as parts of

saharan Africa and in immigrant countries in the new world challenges primodialism's theory

of ethnicity (Eller and Coughlan 1993; Brubaker 2001; Lustick 2001).

Second, the primodialist assumption of the attributed signification of kinship relations

that ethnicity assumes is sociologically inexplicable and unanalyzable (Eller and Coughlan

1993). Constructivist results provide limitations with the relatively recent construction of

ethnic groups in colonialist and post-colonial governments. Another example of a group

constructed from the phenomenon of flexible identity is African Americans through high rates

of intermarriage in the United States. In sum, Tanasaldy (2012, p.27) cites Cornell and

Hartmann's (1998, p.50) Yang (2000, p.43) statement "Primodialism cannot explain the

phenomenon of identity change, or the emergence and disappearance of ethnic identities".

The Marxist tradition views ethnicity as a social class approach in the study of

ethnicity in industrialized societies. In Marxist theory the focus is not social ties, but class

struggle, which is transformed by the revolutionary nature of capitalism (Fenton, 1999 pp. 97-

98). Class relations are founded on the exploitation of labor by capital and the inevitability of

profit-seeking. They argue for ethnicity because discrimination in industrial societies, for

example, depends on class relations in those societies. Eriksen (2010) gives the example of a

study of immigrant groups in a North Atlantic society. These groups tend to rank low in the

division of labor, they are regarded as a reserve workforce needed when there is a demand for

labor, and those left behind are sometimes ostracized during economic crises.

Some conflicts between immigrants and the domestic working class, sometimes taking

the form of racism and riots, have sometimes been considered in this framework as a benefit

to the system as a whole, as they divert attention from the fundamental contradiction between

labor and capital (Eriksen, 2010 p.160).

5.2.2.

Constructivism:

Constructivism theory is more about the fluidity of ethnic identity. For constructivists,

ethnicity is connected to a broad definition. In the study of nationalism, this approach is used

by two prominent authors, Benedict Anderson in Community of Dreams and Ernest Gellner in

Bangs and Nationalism, who studied the phenomenon of nation-states and nationalism in

several countries. They argue that nations are built from natural phenomena. Theorists of

nationalism call this approach the modernization approach (Ozkirimli, 2010, Chapter 4).

In ethnic studies, the term Malay ethnicity in Malaysia is an example of a definition

constructed according to this approach. Malay has been constructed by colonial

historiography and adopted uncritically by most historians after the colonial era (Sahmsul,

2001). Another example of this approach in ethnic studies is the construction of ethnic studies

on Latino and Hispanic ethnic groups in the United States. Latino and Hispanic identify

themselves and are constructed also by white Americans to call people who speak Spanish

(Nagel, 1994).

In some literature, the terms ethnicity and nation can intersect, which is referred to as

ethno-nationalism. Research studies on the phenomenon of ethnic identity later became nation

and nationalism in studies on secessionist movements in several countries (Olzak, 2007). For

example, Aspinall's (2009) study in Indonesia on the Aceh rebellion, and Papuan nationalists

in West Papua Province (Webster 2001). Other studies on Basque and Catalan nationalism in

Spain or Quebec nationalism in Canada (Belanger and Pinard, 1991) (Conversi, 2002).

5.2.3.

Instrumentalism:

Some scholars refer to instrumentalism as the same or another version of constructivism

(Hale, 2008 p.15). Instead, instrumentalist theory emphasizes the usefulness of ethnic identity

as a political instrument, used by individuals or groups to achieve their personal political

goals. "the emphasis is on the political leaders, businessmen and people who mobilize the id

community around an ethnicity that may have latent or forgotten identities and grievances -

not the group itself, and the area of concern is the political process, not the historical origins

of the group or the changing environment in which it exists or defines itself". (Rudolph, 2006

p.5). People switch to a particular ethnicity and remain ethnic when their ethnicity provides

significant benefits to them. "It is ethnicity, like class and nationality that suggest political

mobilization to advance group interests" (Yang 2000: 46 cited by Tanasaldy, 2012, p.28).

Furthermore, theories of ethnicity have trended away from focusing on ethnicity as a

primodial approach (Rabhuska and Shepsle, 1972; Geertz, 1973 cited by Birnir 2007) that is

heavily influenced by contextual factors and political strategies adopted by group leaders as

an instrumental approach (Birnir, 2007 p. 21).

Although the trend of ethnicity theory is changing to an instrumentality approach, there

are some limitations to this approach. For example, according to Barth, ethnic categories as

organizational vessels are possible given the number and form of contents that vary according

to the socio-cultural system (1969a, p. 14 cited in Eriksen, 2010 p. 63). Implicitly, he wanted

to argue against cross-border contacts and cultural changes in group content, a constant ethnic

category that is needed in competitive situations. Barth explicitly defines tennis as a categorial

ascription that categorizes a person in his or her most common basic identity and is thought to

be determined by his or her origin and background (1969a, p. 13 cited by Eriksen, 2010 p.

63). Second, controversy can be identified about the problem of objectivity in ethnicity

studies with instrumental approaches.

None of the above approaches fully explain all ethnic phenomena. It depends on the

type of society, time and social context. Primodialism cannot explain the phenomenon of

identity change or the emergence and disappearance of ethnic identity (Cornell and Hartman

1998, p.50; Yang 2000 p.43 cited in Tanasaldy, 2012, p.28). 50; Yang 2000 p.43 cited by

Tanasaldy, 2012, p.28). While most scholars see constructivism and instrumentalism

approaches as broader, these two perspectives have some limits because they ignore primodial

ties (Liatin 1998: 11-2 cited by Tanasaldy, 2012 pp.28-29).

As a result, a combination of these three approaches is needed to look at the case of

Sumatra. For example, in the case of the Chinese community in the Eastern Belitung region,

the primodialism approach can be used to analyze the phenomenon of Chinese or Chinese in

language. They come to this area to mine for labor reasons, but their identity remains as

Chinese. On the other hand, constructivism is useful to look at the change of Chinese to

Malay. For example, they will become Malay if they convert to Islam. In the Muslim

community they will be referred to as Malay instead of Chinese. Being Malay could be

beneficial for them in terms of discrimination by the majority. The model of ethnic formation

based on the constructivism approach can also be found in Malaysia (Nagata, 1974 p.343).

even though according to the primodialism approach, Javanese migrants in ethnic Malaysia

are not the same as the indigenous Malay ethnicity, but according to government policy the

Javanese belong to the Malay ethnicity because their religion is Muslim (Hirschman, 1978)

(Nagata, 1974, p.335).

In the case of Lampung, Javanese and Lampungese in the urban context are difficult to

classify and differentiate due to assimilation and intermarriage between these two ethnicities,

but in the rural context Lampung is still easy to differentiate for spatial reasons. In rural areas

it is easy to determine the boundary between a Lampung village and a Javanese village but

not in urban areas. So using a primodial approach to distinguish Javanese from Lampung

would be useful in rural areas. On the other hand, it is difficult to determine the case of

marriage in Indonesia in the context of Malay and Chinese because of the different religions

in the two regions. In the case of electoral competition, ethnic issues between ethnicities in the

cases of Bangka Belitung and Lampung can then be explained more precisely with an

instrumental approach (Alensia, Baqir, and Easterly, 1999).

5.2.4.

Conceptualizing Ethnicity and Ethnic Polarization:

Since the definition of ethnic polarization varies among researchers, it is important to

explain what ethnicity and ethnic polarization are. In humanities and social sciences it is more

complicated to define what ethnicity is compared to other sciences such as natural sciences.

The definition of the term is influenced by various aspects that intersect with one another.

Jones mentions four aspects that influence the definition of ethnicity. According to the

encyclopaedia of Britain, "ethnicity refers to group identification based on perceived cultural

distinctiveness to make the group a -people‖." These distinctives are believed in and expressed

in language, music, values, art, style, literature, family life, religion, rituals, food, naming,

public life, and material culture" (2016). Geertz argues that the main markers of ethnicity are

blood ties, race, language, region, religion and customs (cited by Tanasaldy, 2012 p.28).

In addition, Weber defines ethnic groups as groups that share a subjective wealth in

common descent due to similarities of physical type or habits or both, due to the memories of

colonization and migration (1968, p.389 cited by Bayar, 2009, p. 1640). Thus, Weber's -

ethnicity‖ refers to the perception of shared ancestry and culture with some features usually

associated with such things as shared language, physical resemblance, common rules and

rituals of life, and including religion. In Sum, an ethnic group is broadly defined as a group of

people who share a common point of reference with at least one ethnic dimension of the

social world. They also share the view that they do have this in common. They capture this

commonality in a label, the name of the ethnic group. (Hale, 2008, p.47).

Ethnic polarization in this study is operationalized as the difference between positions

taken by members of ethnic groups on issues or about competition in local elections. Alensia

uses the term -ethnic divisions‖ for the same term of ethnic polarization. According to

ensyclopeadia.com (2017), "ethnic fractionalization relates to the number, size,

socioeconomic distribution, and geographic location of distinct cultural groups, usually in a

state or region described otherwise. More specific forms of culture may refer to language,

skin color, religion, ethnicity, customs and traditions, history or others. Specific criteria alone

or in combination. Often this form is used for social exclusion and monopolization of power".

To measure fractionalization or polarization by ethnicity among countries around the

world, several scholars have conducted research on this issue. Alensia, for example, used

quantitative methods and introduced a new method of calculating ethnic polarization to study

polarization and its impact on economic performance for about 190 countries (Alensia,

Devleeschauwer, Easterly, Kuralt, and Wacziarg, 2003). However, according to Alensia, it is

difficult to precisely evaluate the impact of ethnic polarization on economic growth due to the

factor of Geographical. Another example is the Reynal-Querol Index conducted by

Chakravarty and Maharaj, (2011). However, these authors only provide a partial

characterization of the Reynal- Querol (RQ) index of ethnic polarization using an alternative

set of independent axioms.

5.2.5.

Ethnic Polarization after Regime Change:

The second theoretical framework in this research is ethnicity in ethnic polarization.

Ethnic polarization in Indonesia emerged as a result of democratization and decentralization

after the Suharto era. After the holding of local elections, it is ethnic polarization in local

election competition based on ethnic competition. Some studies on this issue are as conducted

by several scholars. Particularly for the Indonesian context, some studies were conducted by

scholars who were concerned with the impact of democratization after the fall of the Suharto

era.

On the issue of communal violence for example, there are several articles by Aspinall

(2011), Betrand (2008), C. Wilson (2015), ID Wilson (2006), Menchik (2014), and Van

Klinken (2007). They argue that there was indeed an increase in ethnic violence after the

regime change in Indonesia. In a broader context, the same conclusion of arguing that there

was an increase in ethnic conflict after the regime change has also been made by several

authors. For example, a study from Georgia conducted by Siroky and Aprasidze (2011),

which agrees with Hutington (1991) that development crises, such as ethnic conflicts and civil

wars, follow democratization. In the context of African countries, Roessler (2005) conducted

his research in Kenya and Rwanda. He argues there is state violence by incumebt and

moreover democratization empowered the opposition to increase political reach, to take into

account rural constituencies and entire ethnic groups. HJ Choi and Raleigh (2015, p.158)

analyze how regime change creates incentives and disincentives for opposition groups to

incite different styles of political violence. they argue that "variations on the two specific

parameters of governance, checks and balances and political participation, forcing the country

towards one of three forms of conflict, including civil war, political militias, and riots."

Furthermore, research by Hegre, Ellingsen, Gates and Gleditsch (2001) covers more

data. Their study on democracy and civil wars from 1819 to 1992 data suggests that in some

cases ethnicity-related domestic violence is associated with political change; whether towards

better democracy or more dictatorship. However, a major weakness of such studies is the

failure to address whether ethnic polarization has an impact on some inclusive institutional

work. This study focuses on how institutional change had an impact on the increase in ethnic

violence. Looking at the work of inclusive institutions after civil war and regime change Jhosi

(2012). After analyzing data on the post-civil war transition to democratization after regime

change from 1946-2005, he found the proportional representation system and parliamentary

system were the most important institutions that helped sustain the post-civil war. There are

limitations to this research, however, it only addresses the issue of how to treat a post-civil

war society with a liberal parliamentary system. In other cases, for example Iraq this thesis

does not work. Democratization and institutional changes after the authoritarian regime, did

not create a peaceful state. These changes did not succeed in stopping sectarian conflict and

the proliferation of terrorism.

Some scholars have also made studies examining ethnic polarization in local elections.

From India for example, research by Wilkinson (2004) to show how electoral incentives at

two levels interact to explain where violence breaks out and more so why some states decide

to prevent violent mobs and others are unrelated to the higher or lower role of politicians

planning elections with clear objectives. In the context of the Bottom Billon countries In

Africa, Collier (2009) describes how ethnic politics and ethnic polarization in elections create

political disasters as a trigger for civil war and poverty in Africa.

(Collier, 2009 p.61). Similarly, Collier's conclusion is echoed by Kaplan (2000, Chapter

1) who argues that the post-cold war era of democratization is illusory in the Nigerian context,

where democracy based on ethnic politics has led to increased ethnic violence.

In the case of local elections in Indonesia, Aspinall, Dettman and Warburton (2011)

conducted research on the 2010 Medan city elections. They described the election as an

example of identity shifting from ethnic to religious identity issues that can occur when

politicians choose multiple overlapping identity categories in changing political contexts.

However, Aspinall (2011, p.289) argues that ethnicity still has a role in political arenas such

as local elections. But what prevails is a soft form of ethnic politics, with few deep disputes

about historical ethnicity or cultural policies that are more ethnically political. Moreover, he

argues that rather than ethnic polarization, democratization in Indonesia has produced strong

new norms of compromise among ethnic groups, especially among ethnic candidate coalitions

in local elections.

In short, he argues that ethnic politics in Indonesia is relatively weak. The same

conclusion was made by (Allen, 2015) when he studied clientelism and personal voting

behavior in Indonesia. He concluded that ethnic politics is weak compared to clientilism.

Aspiball and Allen's interest in local and ethnic elections argues that weak ethnic politics may

be questionable in the case of local elections in some parts of Indonesia, where candidates

from the non-Muslim Chinese ethnic minority became candidates and won the election. These

regions in the case of East Belitung when Basuki Tjahaja Purnama's brothers, both Basuki

(Ahok) and Basuri won local elections in predominantly Malay Muslim communities.

5.2.6.

Inclusive Institutions and Ethnicity

This research will discover the impact of ethnicity and ethnic relations in certain

inclusive institutions such as participation and transparency. The generalizations of many

published studies on the issue of participation are problematic when we look at the context of

the relationship between development, participation and ethnicity. Academia has so far lacked

the ability to address this issue.

Some scholars focus on ethnicity and turnout in elections rather than community

involvement in the policy-making process. For example, studies by Darr and Hesli (2010),

Jakson (2003), and Fieldhouse & Cuts (2008). Dar and Hesli conducted research in post-

communist Muslim societies in the Kyrgyz Republic. Jakson studied Latino electoral

participation in the United States. Fieldhouse and Cuts studied the influence of ethno-religious

composition on voter turnout in the UK, a case study of the 2001 UK elections.

However, some scholars also write about ethnicity, and institutionalization

(participation) in development talks. According to the Web of Science, there are 58 articles on

the field of study relevant to this topic, which use the keywords; development, ethnicity and

participation. The most cited article on the web is a journal article by Toll (2001) which has

been cited 47 times. Stoll's (2001) study addresses the issue of racial differences in

participation in voluntary associations. He argues that after accounting for the adverse effects

of poverty in the area, blacks participate in more voluntary associations than other whites,

while Asians participate the least.

The black ethnic community theory of greater participation, as black people living in

black communities participate more in organizations especially in one political organizations,

than blacks who do not (Stoll, 2001 p.529). However, this study does not focus on these

institutional and developmental issues.

If we modify our field of study to only development studies and economics, there are

only 12 articles in the science wen. The most widely cited article is the one written by Bastia

(2014). Bastia's study on the issue of feminism at the household level, Bastia argues that

although feminism is accepted for its contribution to development, how gender-based

inequality is often related to class, racial, and ethnic inequalities is still largely

underestimated. She theorizes in majority development studies. Bastia's analysis does not take

into account inclusive institutions, nor does she examine participation by ethnicity.

Of the 12 articles, only one is relevant and focuses on the issue of ethnicity,

participation and development. This article was conducted by Fontana and Grugel (2016), this

study explores the challenges of ethnic-based participation and its potential to catalyze

inclusive policies for marginalized social groups in the Bolivian context. The authors argue

that indigenous political participation in policy-making using consultation and free, prior and

informed consent (FPIC) does not automatically result in better or more democratic

governance and more equal societies. In the study, the authors only examine the quality of

democracy with FPIC as an instrument of participation. The study does not cover the idea of

development itself. The study does not take into account pre-existing development such as

human development, poverty, ecological issues and other welfare issues.

Using keywords such as ethnic transparency and development, there are only two

journal articles that are not relevant for this research according to the web of science in all

subject areas. If we modify just two keyword categories; transparency and ethnicity, there

were 19 journal articles across all fields and only two articles relevant to the social science

context.

The first article is by Hirschman (2011). He writes about the cultural dynamics and

tensions of efforts to reform African tax bureaucracies according to contemporary global

standards for institutional reform such as independence, transparency, and efficiency. He

argues that in Mauritius, there are three interacting bureaucratic cultures in this area of the

public sector: a global semi-private sector, highlighted by the performance of a New Public

Management (NPM)-based culture; a communal culture with emphasis on loyalty, ethnic

identity, and union solidarity; and finally a Weberian culture where hierarchical processes and

security are important. As a result, the Mauritian government underwent reforms such as tax

reform, which was not technically approachable overall and apolitical due to these conditions.

The main limitation of this study however is the lack of development issues in this article. The

author is concerned about how difficult new public management reforms are to implement

due to ethnic and cultural barriers.

The second study was conducted by Ijewereme (2015) from Nigeria. He concluded that

there is corruption in the Nigerian public sector due to social pressure, power, nepotism,

involving low risk and high opportunity of corruption. However, this study failed to directly

examine the impact of ethnic relations on specific institutions such as transparency and

accountability. Furthermore, if you combine key words such as inclusive regulation and

ethnicity, you will find one article that is not relevant according to the web of science.

In conclusion, research to date has tended to focus on participation in elections rather

than public engagement participation in policy-making processes. On the issue of

transparency, it is rare for scholars to conduct research on the relationship between

transparency as an inclusive institution and ethnicity in the context of lecture development.

5.2.7.

Impact of Ethnic Polarization on Institutions

This study aims to address the impact of ethnic polarization on institutions. In recent

studies, ethnicity has been shown to have an impact on economic performance but very few

have looked at whether the government is inclusive or extractive (institutional), as an

endogenous impact of factors such as ethnic diversity and ethnic migration.

Some researchers have focused on public goods as a key provision. The strongest

argument for this is that there is a negative relationship between ethnic diversity and the

provision of public goods (Singh and Vom Hau, 2016). Some studies by Habyarimana et al

(2007), Miguel and Gugerty (2005), Alesina, et al (1999) show that there is evidence that

ethnic diversity has a correlation with low levels of public goods (such as low crime, good

schools, good sanitation etc.) issued by the government. if ethnic diversity is low, there will

be better public goods. The successful provision of public goods in places with the same

ethnic community can be attributed to the strategy of the selection mechanism: under the

same setting, there is a cooperative ethnic balance, while non-ethnicity is not. -'Ethnic unity is

more closely linked to social networks and is therefore more plausibly able to support

cooperation through the threat of social sanctions' (Habyarimana et al., 2007 p.709).

Furthermore, research conducted by Badwin and Huber (2010) measured the impact of

ethnic diversity in government, with data from 46 countries. They argue that inequality

between groups has a large, strong and negative relationship with the provision of public

goods (Badwin and Huber, 2010 p.644). However, the weakness of the study is that it does

not provide an explanation of how state institutions work in providing a public good. With the

quantitative research method, this study only measures ethnic diversity as the independent

variable and the determination of public interest as the dependent variable. There are no

moderator variables, such as the institution and how it works as an independent variable

impact of diversity or ethnic relations. Perhaps the most serious disadvantage of the

quantitative methods used by Badwin and Huber is that these studies do not go into depth on

the "why" question.

In the Indonesian context, some studies link ethnic diversity and the provision of public

goods such as the one conducted by Bandiera and Levy (2011). Bandiera and Levy (2011)

studied whether democracy promotes the interests of the poor or the elite. They argue that

"policies are more closely aligned with outcomes favored by elites when government is

divided along ethnic lines". Moreover, "when the poor are divided into groups with different

preferences for public goods and politicians from different groups can form coalitions, the

degree of diversity endogenously determines the power of wealthy elites in influencing policy

outcomes" (Bandeira and Levy, 2011 pp.1328-1329). However, this study has some

limitations. For example, this study does not cover how local leaders from ethnic minorities

win local elections and how they secure their power when providing public goods fairly

without discrimination among ethnic groups or whether they provide discriminatory policies

that only benefit the same ethnic minorities. It is important to look at the phenomenon of

Ahok, the Chinese minority governor who rules the local governments of Jakarta and

Belitung.

In contrast to projects that address the impact of ethnic relations on institutions, Sumitra

Jha (2013) and Pepinsky (2016) study the relationship between institutions and ethnic

relations. Jha uses a historical institutionalism approach in explaining the impact of economic

and trade institutions on Muslim-Hindu relations in India. In short, he argues that the basis of

ethnic tolerance in South Asia is the institution of non-trade discrimination. Trade institutions

created a legacy of tolerance in terms of territory. This research is a good explanation of the

problem of inclusive institutions and ethnic tolerance. However, one question needs to be

asked, is whether extractive institutions in South Asian history are exogenous or endogenous?

This research does not address it. For example, in some state histories, institutions are the

influence of colonialism as an exogenous impact. The study by Acemoglu and Robinson

(2006) attempts to show the impact of colonization by European countries on economic and

political institutions in some colonial countries. For example, Congo's institutions were very

poor because of Belgium's colonization strategy. They incorporated extractive status through

the rapid transfer of resources to the metropolis and slave trade was the most extreme form of

this institution.

Unlike the Congo, the colonization strategy in Australia, the US and New Zealand is

different. The colonization strategy here is to establish institutions that enforce the rule of law

and encourage investment (Acemoglu, Johnson and Robinson, 2000 p.76). Inspired by

Acemoglu and Robinson, Michalopoulos and Papaioannou (2013) studied Africa in search of

the relationship of colonial ethnic pre-institutions to development in African countries. They

argue that there is a strong correlation between pre-colonial institutions and development.

They refute the claims of some scholars who argue that development is driven by observable

differences in geography, ecology and natural resources.

However, Alesina and Giuliano (2015, pp.898-938) have mentioned that culture will

influence institutions. In contrast to the colonial legacy theory of institutions, they assume that

culture and institutions are endogenous variables that may be influenced by geography,

technology, epidemics, war, history and so on. They further argue that -it would be wrong to

claim causal primacy for either. Culture and institutions interact and develop in a

complementary process with feedback effects‖. This study, however, does not include ethnic

polarization as an endogenous variable that can determine institutions. In another of his

works, Alesina argues that "many countries are ethnically and linguistically segregated, i.e.,

where their group living more spatially separated, have lower governance quality" (Alesina

and Zhuravskaya, 2008 p.1872). Separate countries have much lower quality of governance

according to the World Bank's index of rule of law, control of corruption, quality of

regulation, government effectiveness, and accountability. (Alesina, Alberto and Zhuravskaya,

2008).

The reason behind this finding is lower public trust due to higher ethnic segregation.

Thus, lower trust is linked to social issues and lower quality of governance. They argue that

segregation in a society based on ethnic groups can lead to lower trust between members of

different groups. There is a reverse causality: if certain groups choose to live separately, it

may be because they trust each other less. Furthermore, in relation to decreased trust between

ethnic groups, segregation can be associated with group distrust because it increases the

homogeneity of local communities. There is a link between social trust and the quality of

governance. "Since segregation affects trust and trust affects governance quality, trust is an

important mediating factor between segregation and governance quality" (Alesina and

Zhuravskaya, 2008 p.18731874).

In the Indonesian context, the same argument has also been made by Mavridis (2015).

He argues that ethnic diversity tends to decrease trust for social capital. However, Mavridis

has limitations in his conclusion when we want to link trust and issues that include social

capital to better institutions. His quantitative research method only includes a linear causality

relationship between the variables of ethnic diversity and social capital.

Furthermore, in another study, Alesian and LA Ferrara (2005) concluded that ethnic

diversity has higher points of failure in the economy is not a general conclusion. In a country

with good institutions like the United States, there is good economic performance even

though the U.S. is an ethnically diverse country heterogeneous in ethnic diversity especially

New York City. "trust is lower in segregated countries and higher in well-governed countries"

(Alesnia and Zhuravskaya, 2008 p.1909). However, there is inconsistency with this argument.

It is not clear which is the independent variable ethnic segregation or quality of governance.

In some parts he argues that trust improves the quality of governance, in other parts he argues

that it is trust that creates the quality of governance. He argues that ethnic segregation can

create lower trust, and thus better governance. On the other hand, he argues that better

governance creates trust even in multi-ethnic countries. Moreover, Alesina's previous study

did not deal with the context of migration and the context of local governance, it focused on

the impact of ethnic segregation and the quality of governance.

Some with Alesina, Paul Collier (2000) invokes the context of political institutions in

explaining the relationship between ethnic diversity and economic performance in developing

countries. He argues that developing countries with democratic political institutions to the

extent that ethnic diversity does not systematically impact on government choices

significantly in prioritizing growth and redistribution, although in some compositions certain

ethnicities may increase or decrease their growth rates depending on the extent to which

ethnicity and income are correlated. Conversely, in dictatorial regimes ethnic diversity tends

to shift away from the government's policy choice towards redistribution as the leader is able

to centralize the redistribution of his immediate group (Collier, 2000 p.224). However, this

study does not include the term democracies with free elections, but poor political and

economic institutions. In some developing countries they may have democracy only for the

election period with non-discriminatory (inclusive) institutions. Using democracy only as free

elections for The indicators that justify a country's democracy or undemocracy may be

questionable.

Overall, however, new studies do not take ownership of pre-existence such as migration

as a major factor in ethnic polarization for governance. Few authors have been able to utilize

any systematic research into the impact of migration and ethnic diversity on institutions.

Institutions as moderator variables between diversity and development variables will be

covered in terms of this research proposal.

5.2.8.

Tribes and Institutions in Indonesia:

The majority of studies on ethnicity in Indonesia discuss power relations, ethnic

violence or ethnic competition based on ethnicity. Studies on migration, ethnicity and

institutions in Indonesia only began in 2016, spearheaded by Pepinsky. This subheading will

review studies of ethnic politics in Indonesia that have been conducted by several scholars.

Finally, this section will review previous studies on the impact of ethnicity on governance or

institutions.

Several scholars have conducted studies on ethnicity and politics in Indonesia. Van

Klinken (Van Klinken, 2007) studies the emergence of communal and ethnic violence due to

demonstrations in Indonesia. In addition, Aspinall and Fealy (2003) do some research on

ethnic politics in local power in Indonesia. Aspinall also researched the insurgency in Aceh

province (2009). This research examines issues of nationalism and ethnicity in Indonesia's

Aceh province. He argues that the Free Aceh Movement (GAM), a separatist insurgency in

Aceh transformed from a pseudo-fantasy into a guerrilla army in a generational space, leading

to a conflict in which thousands died. He also explores the complex relationship of Islam and

nationalism, explaining how a society renowned for its Islamic piety gave rise to a guerrilla

movement that eventually rejected the Islamic aims of its founders.

In addition, Choi (2011) studied how local elections in Indonesia have affected the

development and dynamics of democracy in Indonesia, which is still very young. There is a

transformation of elites and parties at the local level from before. A study by Reuter (2009)

looks at the impact of globalization on local identity in the Indonesian island of Bali. He

argues that there are new social movements that demand regional autonomy, more local

control over local resources and greater recognition of traditional institutions. Such social

movements explain the many challenges facing the multi-ethnic nation of Indonesia today,

mostly about shifting local identities in a globalized world. It is the result of the politics of

liberalization and decentralization. Moreover, the most recent study on this topic so far was

conducted by Pierskalla and Sacks (2016). This work links decentralization as an institutional

reform to ethnic violence in Indonesia. They argue that there is a positive influence of service

delivery as an impact of decentralization on violence due to newly emerging distributive

conflicts in local ethnic groups around control over service access.

On the other hand "limited separation and the introduction of direct elections of district

heads are negatively associated with some forms of violence. There is little evidence of fiscal

transfers, in general, reducing conflict" (Pieskalla and Sacks, 2016 p.213). However, the

previously studied thesis on ethnicity in Indonesia does not fully explain what impact ethnic

conflict has on development and institutional or governance issues. In looking at ethnic

relations in Indonesia with transmigration initiated by Elmhirst (1999) from a political

geography perspective. He studied the government's transmigration resettlement scheme

which had become one of the most powerful sensitizations embodied by the New Order

government, unity among the country's different ethnic groups was seen as a political agenda.

He concluded that there was confrontation or resistance by the indigenous people (Lampung)

against spatial authority government. Subtle methods of confrontation are articulated in

agrarian landscapes and livelihoods in Lampung. "For example, in the construction of

Lampung's agricultural landscape in the midst of homogeneous plantation agriculture and

transmigrant rice farming, or in hidden transcripts, everyday discourses of resistance to

authority" (Elmhirst, 1999 p.813).

Other scholars studying the impact of regime change and decentralization on ethnic

politics in Indonesia are Tanasaldy (2012), Duncan (2007) and Tyson (2010). Tanasldy's

research turns out that after the fall of the authoritarian regime in Indonesia, there was a

resurgence of ethnic politics in indigenous peoples who had demands to fill local leadership

positions in regional elections. Previously, under the Suharto regime they had no ability to

have a position in local politics in Indonesia which was dominated by Javanese ethnicity and

the military.

Furthermore, Duncan (2007) focuses on the impact of regional autonomy and

decentralization on indigenous ethnic minorities in Indonesia. He shows that changes in local

political institutions have allowed indigenous people to control natural resources through local

elections. This led to corruption in Indonesia's local governments. Tyson (2010) conducted

research on decentralization and indigenous kebnagkitan in Indonesia. He argues that in

contrast to the primary goal of decentralization, public engagement and participation often

takes the form of indigenous revivalism, a process that is highly contested and linked to

political struggle and conflict across the Indonesian archipelago. However, these works have

not provided solutions for the impact of the emergence of indigenous ethnic politics in

institutions and economic development or welfare economics in more detail. This study also

does not cover the ethnic-based competition between indigenous people and Javanese

migrants in local elections and the workings that impact on institutions or governance.

On the topic of government agency relations for the mining sector, Spiegel's (2012)

study is a pioneer in this field. He conducted research on the island of Borneo, Kalimantan

Province In the middle he looks at the impact of the mining sector on the indigenous people of

Kalimantan who have become informal workers in the sector. He argues that mineral policy in

Indonesia shows the same trend as many developing countries if privileges continue to be

given to foreign investment which is bad news for home miners (Speigel, 2012 p.201). This

study would have been more interesting if it had included the impact of mining sectoral

institutional changes on the environment.

Furthermore, it will also be curious to see how the impact of ethnic competition in local

elections between indigenous people and migrants on institutions and development issues

such as environmental disasters in some local areas of the mining sector in Indonesia. This

research will cover institutional and ethical issues in a case study of the Bangka Belitung

archipelago, the archipelago with the largest tin industry, as one of the research locations to

enrich this perspective.

Furthermore, the study of ethnic polarization and governance with new institutionalism,

historical embeddedness in Indonesia only began in 2016 by Tom Pepinsky (Pepinsky, 2016).

Pepinsky sees ethnic relations and migration in colonial Java as the foundational era of

modern Indonesian politics and economic institutions that influence the contemporary state of

the Indonesian economy. Pepinsky develops the theory of social exclusion and settlement,

defined as "a distance maintained between the indigenous population and migrant

communities such as Arabs and Chinese who unlike Europeans, remained excluded from

formal political organization" (Pepisnsky, 2016 p.2). He argues that economic and political

institutions have a relationship between indigenous and migrant which was perpetrated by the

Dutch colonials when Chinese migrants and the Arab-dominated economic sector.

One of the limitations of this explanation is that it does not explain Indonesia in general.

He only focuses on Java, but outside of Java the Dutch colonial formation had a significantly

different impact on Indonesia's development today. This research will cover the impact of

Dutch colonialism and its aftermath in the formation of institutions outside Java related to

migration and ethnicity.

Some researchers have also done so in Indonesia and Malaysia's ethnic relations in a

comparative perspective. Indonesia and Malaysia in terms of ethnic polarization are relatively

close to each other. The pattern is the same in Indonesia and Malaysia in the issue of

multicultural society. There are some things that are different due to ethnic polarization. First,

in Malaysia the dominant ethnic group is Malay while in Indonesia it is Javanese. Secondly,

Chinese and Indians are the second largest group in Malaysia while in Indonesia the second

largest group is indigenous tribes other than Javanese, such as Sundanese, Melayum Batak,

Balinese etc. Chinese, Arabs and Indians are minority groups in Indonesia. For the Chinese,

there are several areas that they occupy such as Bangka Belitung Province and West

Kalimantan Province. Malaysia's population is more than 50 percent ethnic Malay, 24 percent

Chinese and 7 percent Indian. The balance of the population is a relatively small non-Malay

mix of indigenous groups living in Malaysian Borneo and smaller ones from Eurasia and

Thailand (Pepinsky, 2009 p.61).

Several studies on ethnicity in Malaysia and comparative perspectives in Indonesia

began with Alatas' (1997) study. He studied the myth of laziness among indigenous Malays,

Filipinos and Javanese from the 16th century. Alatas argues that there may be colonial

political interests behind the myths that they are instead due to geographical factors such as

climate and the tropics. In fact, Alatas argues that they are lazy workers. In this book, Alatas

argues that cultural fartor as a geographical factor is a myth in Indonesia and Malaysia today.

This book is a counter-argument to the very famous book -The Lazy Native‖ written by Sir

Thomas Standford Raffles, a British Lieutenant Governor in Java from 181 to 1815. Altas'

work is the first to compare Malaysian and Indonesian ethnic relations using a colonial theory

approach. One question that needs to be asked then, however, is whether Alatas' argument of

the hard-working native development issues with institutions? Some countries with shorter

working hours are rich countries like the Netherlands and Germany, not poor countries.

Evidence of this fact can be seen clearly in the case of Greek workers, who are the hardest

workers among OECD countries even though their economic performance is lower than

others (OECD StatExtracts, 2011). As a study, Alatas' book does a poor job of exploring the

issue of ethnic polarization in either poor governance or development institutions. Alatas has

contributed to making a counter-argument to the lazy myth created by colonialism.

On the issue of ethnic minorities by comparing Indonesia and Malaysia, there have also

been several studies conducted by several scholars. Tan's study, for example, shows how the

Chinese are an ethnic minority in Indonesia and Malaysia. Tan argues that the state has a

dominant role in the construction of indigenous hegemonic ideas and beliefs that most visible

dominian minorities rarely have (Tan, 2001 p.967). However, Tan does not provide an

explanation of the relationship between ethnicity and governance in this study.

Another study conducted by William Case in his study of political regimes in Malaysia,

Indonesia and Thailand after the crisis in the context of ethnicity and institutions. He argues

that "Malaysia's hybrid approach to authoritarianism is the most numerous, authoritarian rule

in Indonesia is both the most palpable and the most fragile, and democratic politics in

Thailand exhibit intermediate strengths, therefore delaying but not preventing their

breakdown" (Case, 2009 p.649). Furthermore, he concludes that in "Malaysia, with ownership

held by the state, indigenous or Chinese business elites and overseas investors a hybrid regime

is taking shape". The new order in Indonesia, where state-owned companies are also major

players, but the government tends to empower or promote Chinese Indonesians (Case, 2009

p.667).

However, Case's analysis does not take into account development, nor does he examine

the impact of ethnicity in government. His analysis only concerns the issue of how the

regimes among the three countries treat ethnic minorities in business. Furthermore, Case's

work has similarities with Pepinsky's dissertation at Yale University. Papernsky tried to

answer how Malaysia's authoritarian regime survived, and on the other hand there was regime

change in Indonesia after the economic crisis of 1998. He argues that the Chinese

conglomerate elite who had dominance as a result of discriminatory policies in Indonesia

supported Suharto when Suharto was launched to implement a neoriberal agenda that cost

them economically. In contrast to Suharto, Mahatir avoided the neoliberal agenda that made

cronies and the dominant business elite from the indigenous Malay ethnicity. As a result, they

were solidly behind him and his regime, and his regime survived despite the turmoil of the

economic crisis (Pepinsky, 2009). In conclusion, however, the authors have not been able to

utilize any systematic research on the impact of ethnicity on institutions and development.

This study only focuses on regime change as a result of ethnic relations and authoritarian

institutions.

A pioneering study in the border area between Indonesia and Malaysia on ethnicity,

labor migration and livelihoods was conducted by Eilenberg and Wedley. The scope of their

study explored cross-border ethnic relations as significant for the livelihoods of the Iban

population in the West Kalimantan Indonesia. They argue that "approaching the

interconnections between cross-border labor migration, ethnicity, identity and citizenship and

how they play out becomes a contemporary issue related to Indonesian politics and economic

change". According to them, the economic gap between Indonesia and Malaysia creates

strategic border flexibilities, they are more flexible regarding identity and citizenship between

Indonesia and Malaysia (Eilenberg and Wadley, 2009 p.58). However, their conclusions

would be interesting if they discuss such issues beyond citizenship and livelihood strategies.

They may contribute to the problem of border areas, but they cannot draw general conclusions

in addressing ethnic issues in relation to governance performance between Indonesia and

Malaysia as a comparison. One of the limitations in their explanation is that it does not

explain why the Malaysian economy is better than Indonesia's in the border areas, is there an

impact of changing institutions such as decentralization?

A recent study that looks at Indonesia and Malaysia as a comparison in ethnic issues is a

study conducted by Carolina Prasad (2016). She studies ethnic politics in elections by

comparing ethnic minorities in voting between Kalimntan Indonesia and Borneo Malaysia as

the effects of political institutions play a large role in determining the manner and dynamics

of ethnopolitical manipulation. In this study Prasad only covers the implications of political

institutions for political behavior. However, he does not mention the impact of this on

diversity development.

Overall, researchers to date have tended to focus on ethnic minority studies rather than

the impact of ethnic relations on governance and development. In fact, Pepinsky's study

highlights how the process of ethnic relations had an influence in regime change in Indonesia

but not in Malaysia.

5.3.

Summary:

The primodialist approach to ethnic origins receives some sharp criticism from other

approaches such as constructivism and instrumentalism. For constructivists ethnicity is

connected by a broad definition "the emphasis is on the political leaders, businessmen and

people who mobilize the community around an ethnicity that may have latent or forgotten

identities and grievances - not the group itself, and the area of concern is the political process,

not the historical origin of the group or the changing environment in which it exists or defines

itself". Conceptualizing Ethnicity and Ethnic Polarization Since definitions of ethnic

polarization vary among researchers, it is important to explain what ethnicity and ethnic

polarization are. Jones mentions four aspects that influence the definition of ethnicity: Ethnic

polarization in this study is operationalized as the difference between positions taken by

members of ethnic groups on issues or about competition in local elections.

5.4.

Task/Exercise/Experiment:

•

Explain the primordialism approach in ethnic studies?

•

How does primordialism arise?

•

Explain how Indonesia and Thailand are faring post-crisis in terms of ethnicity and

institutions.

•

Name one example of a case in Indonesia related to ethnic issues

•

In your opinion, what are the challenges faced by Indonesia as a multi-ethnic nation regarding

the shift of local identity in development?

POS 485_ASU_ASSIGNMENT 2024_WEEK 5_AFTER THE WASHINGTON CONSENSUS THE EMERGENCE OF INSTITUTIONAL THEORY

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