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From Independence to Turmoil

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The Creation of the East Timorese Economy

Part of the book series: Palgrave Studies in Economic History ((PEHS))

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Abstract

This chapter looks at the early years of independence, leading up to the serious political turbulence of 2006. After independence, the difficult task of building an entirely new administrative apparatus had to be undertaken. The government’s development ambitions were high and corresponded to the popular expectance of improvements in the living standard. The on-the-ground reality turned out to be different, however. In 2006, the economic and social situation of East Timor did not differ visibly from the one prevailing in 2002. The economic growth of the non-oil economy had been highly variable, with negative rates during some years and modest growth during others, which, however, had to be seen in relation to one of the highest rates of population growth in the world. The poor economic development and stagnating living standards led to protests, violence, and political turmoil.

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Notes

  1. 1.

    Scanteam (2007), p. 14.

  2. 2.

    Cf. Auty (1993, 2001).

  3. 3.

    UNDP (2002), p. 83, Hill (2001), p. 1138.

  4. 4.

    Planning Commission (2002a), p. 20.

  5. 5.

    World Bank (2002), p. 7.

  6. 6.

    Planning Commission (2002a), p. 22.

  7. 7.

    Ibid., p. 70.

  8. 8.

    Ibid.

  9. 9.

    Ibid., p. 73.

  10. 10.

    World Bank (2002), p. 18.

  11. 11.

    Planning Commission (2002a), pp. 72–73.

  12. 12.

    Ibid., p. 91. Most new investments were undertaken by Timorese citizens, however—no less than 82 percent of all ventures according to government figures. No value estimates are available (ibid.).

  13. 13.

    Planning Commission (2002a), p. 91.

  14. 14.

    Three concrete instances of institution building—the Ministry of Social Solidarity, the Central Bank and the Ministry of Health, are dealt with in Barma et al. (2014), Chapters 10–13.

  15. 15.

    Planning Commission (2002a), pp. 37–38.

  16. 16.

    Azimi and Lin (2003), p. xxviii.

  17. 17.

    Planning Commission (2002a), p. 81.

  18. 18.

    Ibid.

  19. 19.

    World Bank (2002), p. 74.

  20. 20.

    World Bank (2002), p. 86.

  21. 21.

    Ibid., p. 81.

  22. 22.

    Planning Commission (2002a), p. 25.

  23. 23.

    Ibid., pp. 24–25.

  24. 24.

    International Monetary Fund (2005a), p. 31.

  25. 25.

    World Bank (2002), p. 17.

  26. 26.

    Leach (2017c), p. 179.

  27. 27.

    Lewis (1954).

  28. 28.

    World Bank (2002), pp. 17–18.

  29. 29.

    Ibid., p. 44.

  30. 30.

    Das (2004), p. 23.

  31. 31.

    Ibid.

  32. 32.

    Ibid., p. 26.

  33. 33.

    UNDP (2002), pp. 17–18.

  34. 34.

    Planning Commission (2002a), p. 22.

  35. 35.

    Note that all official figures on international trade in East Timor underestimate the real figures, since a large amount of unregistered trade is taking place with Indonesia.

  36. 36.

    Planning Commission (2002a), pp. 31–33, 129.

  37. 37.

    For an independent discussion of the development alternatives of East Timor written at the time, see Hill (2001).

  38. 38.

    Planning Commission (2002b), p. 2.

  39. 39.

    For a discussion of the problems of private sector development in the context of poverty, see Kusago (2005).

  40. 40.

    Planning Commission (2002b), p. 58.

  41. 41.

    Ibid., p. 59.

  42. 42.

    Ibid.

  43. 43.

    United Nations (2003).

  44. 44.

    Cf. Joseph and Hamaguchi (2014), Chapter 7.

  45. 45.

    UNDP (2003), p. 117.

  46. 46.

    However, there are strong indirect links since almost all public expenditures are financed through incomes from the petroleum fund (cf. Chapter 11).

  47. 47.

    One reason for low economic growth was the substantial flood damage to crops caused by a delayed rainy season in 2002. Such external shocks tend to have strong effects on an economy where the overwhelming majority of the people are engaged in agriculture (Asian Development Bank 2004).

  48. 48.

    Ministry of Health et al. (2004), p. 71.

  49. 49.

    World Bank (2005a), p. 6.

  50. 50.

    Ministry of Health et al. (2004), p. 72.

  51. 51.

    Angeles et al. (2005), p. 195.

  52. 52.

    Ministry of Health et al. (2004), chapter 6.

  53. 53.

    Interview with Minister of Health, Rui Maria de Araújo, 23 August 2005.

  54. 54.

    Durand (2008), p. 121.

  55. 55.

    International Monetary Fund (2008), p. 14.

  56. 56.

    World Bank (2006b).

  57. 57.

    Ibid., p. 1.

  58. 58.

    Ibid. Cf. also Simonsen (2006), which stresses the tendency of the Fretilin government to override the parliament and bypass the opposition, making political decisions in a top-down, noninclusive fashion.

  59. 59.

    World Bank (2006b), p. 19.

  60. 60.

    Ibid.

  61. 61.

    Ibid.

  62. 62.

    Ibid., p. 30.

  63. 63.

    Ibid., p. 13.

  64. 64.

    Freedom House (2006).

  65. 65.

    Shoesmith (2003) discusses the relations between Alkatiri and Gusmão around this time.

  66. 66.

    Niner (2009), p. 227. Cf. Simonsen (2006), pp. 580–82.

  67. 67.

    Kammen (2003), p. 84.

  68. 68.

    Kingsbury (2009), p. 105.

  69. 69.

    Ibid., p. 107.

  70. 70.

    Ibid., pp. 107–08.

  71. 71.

    Ibid.

  72. 72.

    Shepherd (2014), p. 133.

  73. 73.

    UNMISET (2005a).

  74. 74.

    Kingsbury (2009), p. 118.

  75. 75.

    Ibid., p. 116.

  76. 76.

    Timor Leste Defence Force (2015).

  77. 77.

    Molnar (2010), p. 121.

  78. 78.

    Ibid.

  79. 79.

    Ibid., p. 116.

  80. 80.

    Kingsbury (2009), pp. 112–13, Molnar (2010), pp. 113–15.

  81. 81.

    Human Rights Watch (2004), Freedom House (2013).

  82. 82.

    Molnar (2010), pp. 117–18.

  83. 83.

    Shoesmith (2013), p. 128.

  84. 84.

    Freedom House (2007).

  85. 85.

    Molnar (2010), p. 119.

  86. 86.

    Leach (2017c), p. 180.

  87. 87.

    Molnar (2010), p. 122.

  88. 88.

    Scambary (2009) offers a detailed analysis of the complex relations involved in the conflict. For a critical analysis of the East-West dimension of the crisis, see Leach (2017c), pp. 183–87.

  89. 89.

    International Crisis Group (2008), p. 2, van der Auweraet (2012), p. 5.

  90. 90.

    For detailed, but diverging, analyses of the martial arts organizations (which were outlawed in 2013), see Belun (2014) and Pawelz (2019).

  91. 91.

    A detailed analysis of the elections is found in Leach (2009).

  92. 92.

    Kingsbury (2009), p. 170.

  93. 93.

    Michelmore (2008).

  94. 94.

    José Ramos-Horta (independent), Francisco ‘Lu-Olu’ Guterres (Fretilin), Fernando ‘Lasama’ de Araújo (Partido Democrático, PD), Francisco Xavier do Amaral (Associação Social Democrata Timorense, ASDT), João Carrascalão (União Democrática Timorense), Lúcia Lobato (Partido Social Democrata, PSD), Avelino Maria Coelho da Silva (Partido Socialista Timorense, PST), and Manuel Tilman (União dos Filhos Heróis das Montanhas de Timor).

  95. 95.

    Kingsbury (2009), p. 181.

  96. 96.

    Ibid., p. 217.

  97. 97.

    Ibid., pp. 186–87. During the course of the 2006–07 events, East Timor got to the point where speculations began to be made whether the country was on its way to become a failed state (Cotton 2007; Scambary 2009).

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Lundahl, M., Sjöholm, F. (2019). From Independence to Turmoil. In: The Creation of the East Timorese Economy. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-22052-5_2

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  • DOI: https://doi.org/10.1007/978-3-030-22052-5_2

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