els of education" (p. 213). Since 1970, its GDP per capita per annum has risen from $80 to $1,300, an impressive achievement but still less than half of that in other newly industrializing countries (NICs) of East Asia, such as South Korea and Taiwan.
Because of its inability to pay its foreign debt of $70 billion, the failure of 16 of its banks, an annual domestic inflation of 40 percent-50 percent, a decline of about 350 percent in the foreign exchange value of the rupiah in less than a year, growing unemployment and food shortages, Indonesia has recently been forced to appeal to the International Monetary Fund (IMF) for a large ($43 billion plus) financial bailout package ("Once", 1998, February 21, p. 37; Sanger, 1998, March 8, p. 4(1)). Since it must implement financial austerity measures to restore its international solvency, Indonesia faces the possibility, at least in the short term, of a declining economy and rising mass discontent, all of which are coming at a time when the 30+-year military rule of Suharto is probably nearing its end. The Economist said in 1997, "Some sort of systemic change is inevitable. That is likely to mean a power struggle among the elite, heightened social tensions and more violence" ("Suharto's", 1997, July 26, p. S4). What do Indonesia's history and developmental theories suggest will be its likely direction?
Pre-modernization and Developmental Theory
According to Frederick and Worden (1993), "the modern state of Indonesia is in a real sense a nineteenth-century creation" (p. 21). The petty principalities of Java and Sumatra, often involved in internecine warfare, were no match for the Portuguese, Dutch and other traders who came to the archipelago after the 15th century in search of its spices and other riches. After Dutch colonial rule, 1816-1949, Crouch (1980) says that "political activity was largely limited to a small, educated elite in urban centers", and anti-Dutch nationalism was ...