Promoting public health: Can fiscal policy play a role?
January-March 2015

I have been on the IMF’s Board of Advisors for Asia-Pacific and I traveled to many countries. But what was puzzling was that Bangladesh is able to export garments at a far lower price compared to Indonesia, although their infrastructure is completely collapsed. The explanation is that their labor costs are one-third of ours.

If we want to survive in the garment business, what can we do? We have to create the [kind of] batik that the middle class will demand, batik priced at millions [of rupiah]. It means we are entering a niche market in terms of quality. The implication is that when the resource era is over, cheap labor is over, the emphasis in the development strategy should be in the quality of human capital. And if you’re talking about human capital, you’re talking about two things: education and health. Those are the main ingredients.

That is why, when I came across the invitation for the forum, I thought, I had to come, because this is part of Indonesia’s strategy for the future. We have to work on the quality of human capital.

South Africa, Brazil and South Korea all belong to the middle income [nations]. However, only South Korea is among the industrial economies because they emphasize human capital. Here, the issue of promoting public health is relevant. I will talk about some issues relating to policy, and later on will talk about public health.

Catching up

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