The Asian Financial Crisis

Abstract

This chapter further addresses the political-economic dynamics of the period around the Asian Financial Crisis (AFC) that shaped the interaction between Indonesia and such prominent actors as the United States, the World Bank, and the International Monetary Fund. It details the way that the AFC created an opportunity for the World Bank to extend its block grant model to the education system, in addition to discussing the factors that encouraged major legal reforms related to decentralization in the late 1990s and early 2000s. The final sections of the chapter shift to address the umbrella program of the government through which it has continued to pursue the model of community development through the use of block grants in the 2000s and 2010s. These sections emphasize that the government, in building on the urban and rural community development programs supported by the World Bank in the 1990s (discussed in the previous chapter), sought to scale up and to take control of its main community development program. However, while the government was able to reduce its reliance on World Bank funding, it continued to rely on World Bank knowledge dissemination, technical assistance, and aid coordination.