Definition of Governance

Broad definitions of governance are often rather vague (Box 1). There is a very considerable literature that discusses how, precisely, the concept of governance might be defined¹; for the purposes of this paper this literature may be summarised as emphasising the following:

• The processes by which governments are chosen, monitored, and changed.
• The systems of interaction between the administration, the legislature, and the judiciary.
• The ability of government to create and to implement public policy.
• The mechanisms by which citizens and groups define their interests and interact with institutions of authority and with each other.

Considering these issues in the context of governance in Indonesia, two comments may be made. First, a good deal of governance is about the exercise of various forms of power. There are different types of power--ideological, political, legal, military, economic, administrative, and so on--and governments everywhere frequently use various combinations of power to govern.² It is important that economists, when considering issues of governance, bear in mind that many senior government leaders see economic policy tools as part of the broader spectrum of levers of power which they can draw upon at any time to achieve their goals. Just as one famous brief definition of economics is that economics is about "who produces what, and for whom", so a brief definition of governance might be "who controls what, and for whom".

Second, for the purposes of discussing governance in Indonesia, it is useful to distinguish between issues of governance at the macro and micro level.

• Matters which might be classified at the macro level include such things as constitutional reform; the overall role of government itself (size and resources); the relationship between the key national institutions of the administration, the legislature, the judiciary, and the miliary; and the manner in which the political market operates.
• Micro issues of governance can be taken to include issues in many sectors of the nation including at the regional and unit level: government departments, state owned enterprises (SOEs), commercial firms, education and health institutions, cooperatives, organisations active in civil society affairs (such as the media, think thanks, and non-government organisations), and informal institutions of governance which operate in the large informal sector across Indonesia.

Perhaps the most striking thing, looking over these incomplete lists, is how broad the topic of governance really is. This paper will survey just a few issues of governance in Indonesia.

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