Is Indonesia's manufacturing sector still relevant for growth and development? As a result of the last boom in global commodity prices between 2003 and 2008, resources in Indonesia shifted towards commodities and resource-based manufacturing as these sectors seemed to promise higher returns on investment. In recent quarters, however, the manufacturing sector has exhibited stronger output growth rates and attracted more investment. This note argues that building on the current momentum of manufacturing growth is critical for Indonesia's development (i) to support the creation of higher-productivity jobs, (ii) to sustain higher economic growth and progress in structural change, and (iii) to achieve long-term prosperity. Finally, this note also shows how the Master Plan for the acceleration and expansion of Indonesia's economic development (MP3EI) acknowledges the importance of the manufacturing sector for economic growth.
Indonesia's gross domestic product growth rate declined significantly after the Asian financial crisis (AFC) of 1997–1998. The country's potential and balance-of-payments growth rates are only about 5.5% and 3%, respectively. One important reason is that the country's industrialization pace declined after the AFC. Today, Indonesia is still exporting many unprocessed natural resources and simple manufactures (not complex products) with a low income elasticity of demand. This report analyzes how Indonesia's manufacturing sector could diversify and upgrade during 2020–2024 and beyond. This is essential if Indonesia is to attain upper middle-income status as soon as possible. Policy makers and the private sector need to collaborate to identify the coordination failures that hamper the discovery of those products that Indonesia could successfully produce and export. These must be complex products with a high income elasticity of demand. The report proposes a number of policies to expedite this process.
This report analyzes how Indonesia's manufacturing sector could diversify and upgrade during the 2020-2024 period and beyond. This is considered essential if Indonesia is to attain upper-middle-income status as soon as possible. The report asserts that policy makers and the private sector need to collaborate to identify the coordination failures that hamper the discovery of those products that Indonesia could successfully produce and export. The report proposes a number of policies to expedite this process.
The presidency of Susilo Bambang Yudhoyono (2004-14) was a watershed in Indonesia's modern democratic history. Yudhoyono was not only the first Indonesian president to be directly elected, but also the first to be democratically re-elected. Coming to office after years of turbulent transition, he presided over a decade of remarkable political stability and steady economic growth. But other aspects of his rule have been the subject of controversy. While supporters view his presidency as a period of democratic consolidation and success, critics view it as a decade of stagnation and missed opportunities. This book is the first comprehensive attempt to evaluate both the achievements and the shortcomings of the Yudhoyono presidency. With contributions from leading experts on Indonesia's politics, economy and society, it assesses the Yudhoyono record in fields ranging from economic development and human rights, to foreign policy, the environment and the security sector.
For those planning to trade with, invest in or set up in Indonesia, this report presents an analysis of its industrial base. It is broken down into three chapters. Chapter One surveys the processes of economic growth and structural change within the country. It also reviews the policy environment within which these changes took place. The second chapter gives a focused analysis of the manufacturing sector. All the key issues involved in growth and structural change are discussed in detail, including employment, productivity, ownership, location, environmental impact and trade. It explains the way in which manufacturing diversification has been achieved in recent years and identifies new trends. Following an analysis of the manufacturing sector at an aggregated level, Chapter Three goes on to provide a more specific analysis of its various branches and industries. It assesses the resource base; the recent development trends; and the constraints and prospects for each branch. All the major manufacturing sectors and many individual industries are covered in detail.
This book studies the challenges for Indonesia, once a miracle economy, as it faces premature deindustrialisation, rising inequality and domestic and external factors impacting its export-oriented industrialization. Since the fall of Soeharto, Indonesia has undergone a far-reaching systemic transition from centralised and autocratic governance to a highly decentralised and democratic system. Complicated by regional variations, the country is now being called upon to respect labour rights and, amidst slow global economic recovery, is facing increased competition from other low-labour-cost countries, especially within the ASEAN Economic Community. Tadjoeddin and Chowdhury posit that Indonesia cannot recreate its past miracle based on cheap labour and suppression of labour rights. It will need to move quickly to high value-added activities driven by productivity growth and to develop its domestic market.
As women become more outspoken regarding their right to equal pay, it has been noted that gender equality, with women earning as much as men, would enrich the global economy. These studies have shown that equal pay, equal hours, and equal participation for women in the workforce could lead to a global wealth jump and potentially create knock-on benefits such as lower malnutrition and child mortality rates. Women Empowerment and Well-Being for Inclusive Economic Growth is a collection of innovative research that makes the case for understanding development in economic terms as well as in terms of well-being, empowerment, and participation and uncovers the role of empowering women and achieving gender equality in sustainable development. Research work and cases related to participation of a women's labor force in the economic development of the country, the place of women in society, their contribution to the social development of their country, and the problems faced by them are key features in the book. While highlighting topics including gender inequality, self-worth, and industrial policy, this book is ideally designed for economic analysts, managers, policymakers, business professionals, government officials, entrepreneurs, and business students.
The book focuses on Indonesia's most pressing labor market challenges and associated policy options to achieve higher and more inclusive economic growth. The challenges consist of creating jobs for and the skills in a youthful and increasingly better educated workforce, and raising the productivity of less-educated workers to meet the demands of the digital age. The book deals with a range of interrelated topics---the changing supply and demand for labor in relation to the shift of workers out of agriculture; urbanization and the growth of megacities; raising the quality of schooling for new jobs in the digital economy; and labor market policies to improve both labor standards and productivity.
Economic and social progress requires a diverse ecosystem of firms that play complementary roles. Making It Big: Why Developing Countries Need More Large Firms constitutes one of the most up-to-date assessments of how large firms are created in low- and middle-income countries and their role in development. It argues that large firms advance a range of development objectives in ways that other firms do not: large firms are more likely to innovate, export, and offer training and are more likely to adopt international standards of quality, among other contributions. Their particularities are closely associated with productivity advantages and translate into improved outcomes not only for their owners but also for their workers and for smaller enterprises in their value chains. The challenge for economic development, however, is that production does not reach economic scale in low- and middle-income countries. Why are large firms scarcer in developing countries? Drawing on a rare set of data from public and private sources, as well as proprietary data from the International Finance Corporation and case studies, this book shows that large firms are often born large—or with the attributes of largeness. In other words, what is distinct about them is often in place from day one of their operations. To fill the “missing top†? of the firm-size distribution with additional large firms, governments should support the creation of such firms by opening markets to greater competition. In low-income countries, this objective can be achieved through simple policy reorientation, such as breaking oligopolies, removing unnecessary restrictions to international trade and investment, and establishing strong rules to prevent the abuse of market power. Governments should also strive to ensure that private actors have the skills, technology, intelligence, infrastructure, and finance they need to create large ventures. Additionally, they should actively work to spread the benefits from production at scale across the largest possible number of market participants. This book seeks to bring frontier thinking and evidence on the role and origins of large firms to a wide range of readers, including academics, development practitioners and policy makers.
