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s the man in the top job, President Joko '€œJokowi'€ Widodo seems to have regained some of his lost credibility following a recent Cabinet reshuffle and subsequent economic policy packages.

However, this came just a year after he was sworn as the seventh President. Hopefully the lowest point of the learning curve has passed.

Given his track record of decisiveness, pragmatism and a down-to-earth approach, and being from outside the elite group, Jokowi'€™s coming to power raised hopes that he would significantly improve the effectiveness, quality, inclusiveness and integrity of government, which should have a substantial effect on the economy.

By contrast, Indonesia under previous president Susilo Bambang Yudhoyono'€™s two-term administration was often characterized as an autopilot country, since the administration did not do enough, wasting his political legitimacy gained in the direct presidential elections.

Jokowi'€™s start, however, was hampered by the fact that he was a complete newcomer in national politics and his inability to free himself completely from the oligarchic power brokers on whom he had to depend for his election.

To some extent, he seems to have regained his credibility through the recent Cabinet reshuffle, especially with three new coordinating ministers and a new trade minister, and the subsequent introduction of a series of new economic policy packages. A certain degree of economic nationalism, more precisely emphasizing national interests, has characterized Jokowi'€™s economic policy.

In essence, however, this is hardly different from the counterfactual situation if he had not been elected in last year'€™s presidential elections, or even compared with his predecessor.

Highlighting national interests and economic independence is always politically appealing and very common anywhere.

Essentially, there is nothing wrong with this as long as policies are not hijacked by vested interests sacrificing economic efficiencies. This is where Jokowi built his reputation as a mayor and a governor.

It has to be understood that the current administration inherited a troubling social and economic situation: Steady decline of growth since 2011, the end of commodity boom and the longer-term trends of rising inequality and the attendant problems arising from premature deindustrialization.

The current global economic environment is not helpful, complicating these challenges.

The recent slowing down of growth and currency depreciation are influenced more by external factors, especially developments in China and the US economies than internal causes.

Again, the resilience of the Indonesian economy amid global challenges will largely depend on how successful the administration is in delivering the initial promise of effective and inclusive government with much higher quality and integrity.

All these are political matters.

The single most important variable to watch closely is inequality. The level of economic inequality has been sharply rising since the lowest level in 2000.

During 2000-13, the Gini index of expenditure inequality increased by 32 percent, and now at a record high of 0.41. The rise in inequality, however, is a global trend.

Rising inequality not only undermines social justice objectives, it can also have adverse economic consequences, as shown in recent research, especially from the International Monetary Fund (IMF).

The sharp rise in inequality amid democratization and decentralization reform is against public expectations '€” which can be socially explosive.

Therefore, policies dealing with growing inequality have a clear urgency. On this, Jokowi'€™s policies on expanding mandatory healthcare coverage, expanding education financing, the removal of fuel subsidies and targeting higher tax revenue are steps in the right direction.

One key driver behind growing inequality is the declining share of labor income (vis-à-vis capital), or decoupling between wages and productivity. The growth of real wages/earnings is not keeping pace with productivity growth.

In this case, again, Indonesia echoes the global trend and a declining wage-productivity ratio is found in most economic sectors and provinces.

Disaggregated sectoral analysis has indicated that positive alignments between wage, productivity and employment are found in the large and medium establishments of the manufacturing sector. However, the manufacturing sector itself has been shrinking in the context of premature deindustrialization.

Indonesia needs to upgrade itself to higher wages, higher productivity and a competitive economy through re-industrialization. Going back to the '€œnot-so-good'€ old days of cheap labor intensive industrialization is clearly not an option '€” hoping for the next resource boom is useless.

Skill development and investments in education and infrastructure, among others, are crucial for economic upgrading.

However the starting point is Jokowi'€™s initial promise of effective, inclusive and better-quality government. After all, economics depends on politics.