Listen and Design

This open access book thoroughly investigates the domain of policy design tailored specifically for micro, small, and medium enterprises (MSMEs) with a central emphasis on harmonizing these policies with the preexisting social capital inherent to these enterprises, consistent with the mandate of Bank Indonesia to guard price stability and to promote financial stability, inclusive, and sustainable growth. The study, grounded in the context of Indonesia, underscores the paramount importance of a systematic approach, necessitating social planners and stakeholders to engage in a preliminary phase of active listening, empathetic understanding, and comprehensive knowledge of the diverse mental frameworks prevalent among MSMEs across the nation before embarking on the formulation of bespoke interventions. Readers of this scholarly work can anticipate gaining insightful perspectives into the nuanced policy preferences of both MSMEs and government officials. The methodologies employed, including the Analytic Hierarchy Process and Analytic Network Process, are not only presented but also subjected to rigorous feasibility assessments using the Mechanism Design Theory. Furthermore, the book delves into the intricate challenges faced by MSMEs, including addressing the financing gap and adapting to the digitalization landscape that considers the prevailing social capital, both of which significantly influence their overall productivity. Ultimately, the study underscores the pivotal role played by networks, rather than mere size and the usual suspects (financing, technology, and management), as the linchpin of social capital that profoundly shapes the performance of MSMEs within a specific socio-economic context.

“Professor Iwan Jaya Azis has made yet another substantial and original contribution to the literature on economic development … This study, on micro, small and medium enterprises (MSMEs), is a continuation of his life-long professional career, to focus on key development and policy issues. … advocates an approach to listen, that is, to talk to the actors in a variety of economic and ecological settings, and to design policies accordingly. All too often, this seemingly obvious methodology has been ignored in favor of a top-down approach.” (Hal Hill, H.W. Arndt Professor Emeritus of the Southeast Asian Economies, Crawford School, Australian National University)

“Iwan Azis’s "Listen and Design" is another great new book of his … building on its predecessor "Periphery and Small Ones Matter", it shows that the success of policy programs requires understanding the prevailing social capital … To do this requires listening to MSMEs so as to "align the preferences of enterprises and policy makers." … This is the third, great contribution of Iwan Azis book for all development economists and policy makers.” (Ludger Schuknecht, Former German Federal Ministry of Finance, ex-OECD Deputy Secretary-General, and currently Vice President and Corporate Secretary of the Asian Infrastructure Investment Bank (AIIB))

“The role of micro, small, and medium enterprises is crucial in contributing to the development process. Early in the structural transformation, these enterprises are in the informal sector and gradually move into the formal sector as they learn more efficient business practices. The important contribution of this book is that it successfully searches for policies that can speed up this process and make these enterprises more efficient and productive. The methodology used by the author is original. … This book deserves to be read by researchers and policymakers interested in micro enterprises.” (Erik Thorbecke, H.E. Babcock Professor of Economics (Emeritus), Cornell University)

“There have been many analyses and studies on MSMEs, but Iwan Azis’ book tops them all in terms of evidence base, innovative approach with the AHP and ANP methodology something the author has worked for decades, and most of all written with the heart by recognizing that people are at the center of development and the importance of social capital … This is an incredible reference for all stakeholders from governments, networks of MSMEs, facilitators, and all those who care about people and community centered development.” (Mari E Pangestu, Former Trade Minister of Indonesia and Managing Director of Development Policy and Partnerships, World Bank)

Iwan J Azis is a professor of Emerging Markets within the Dyson School of Applied Economics and Management and was the director of Graduate Studies, Regional Science program (2005–2010) at Cornell University. He is also a professor of the University of Indonesia, and is currently serving as a research scholar at Bank Indonesia Institute. He consulted several governments and organizations in Asia and was visiting professor in Japan, Australia, Singapore, and Indonesia, and a Founder of a Foundation that supports networking among micro and small enterprises in the Global South. He headed the Office of Regional Economic Integration at the ADB, during which he became the interim chair of the Board of Directors of the Trust Fund-Credit Guarantee Investment Facility (CGIF) and a member of the International Policy Advisory Group. He is currently a research adviser to the Indonesian Central Bank and a member of International Advisory Panel of the Asian Infrastructure Investment Bank (AIIB).