Indonesia is a classic example of a country that has overcome the oil curse. This was partly due to wiser spending politics as we weathered extremely volatile global oil prices between 1974 and 1989. Eventually, we moved from an oil-dependent economy to a more diversified one.
A looming quandary is whether we can repeat the same story in resource-rich districts and provinces. It is clear that the central government needs to work with these localities to make progress and avoid the resource curse.
Following the post-Soeharto decentralization, the power to authorize mining licenses and exploit natural resources was transferred to local governments. Resource revenue-sharing mechanisms resulted in improved benefits in some local areas. In most cases, however, the result has been mixed, if not negative.
Most resource-rich districts and provinces lack the necessary techn...