Tiny, Poor and War-Torn: Development Policy Challenges for East Timor

Following its decisive vote for independence on 30 August 1999, East Timor will soon become the world's newest country. The country has a particularly tragic history: centuries of Portuguese colonialism and neglect, 24 years of troubled occupation by Indonesia, and the horrific violence and massive destruction of infrastructure which occurred in the wake of the 1999 vote for independence. The country will start from one of the lowest points conceivable on the scale of socioeconomic development-extremely low income, very limited bureaucratic capacities, barely functioning institutions, and potentially hostile elements in its giant neighbor. The formidable development policy challenges facing this new country are the subject of this paper.