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Halting Progress: Indonesia's Economic Development since 1880*

Published online by Cambridge University Press:  22 April 2010

Pierre van der Eng
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Extract

This article contains a sweeping summary of Indonesia's macro-economic growth and development experience since 1880, largely on the basis of quantitative data from published research. It sets the scene for some of the other papers in this special issue. The paper identifies phases of economic expansion and contraction and some of the broad factors relevant to understanding the phasing of the development process that spans 120 years. Despite the halting progress in the country's development experience, the article underlines the continuity of economic change in Indonesia, beyond the years that demarcate the end of the colonial era. It also addresses the fact that in comparative terms Indonesia's growth experience during the twentieth century was remarkably fast.

Type
Conference: ‘Economic Growth and Institutional Change in Indonesia in the 19th and 20th Centuries’
Information
Itinerario , Volume 26 , Issue 3-4 , November 2002 , pp. 15 - 34
Copyright
Copyright © Research Institute for History, Leiden University 2002

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References

Notes

1 Eng, Pierre van der, ‘The “Colonial Drain” from Indonesia, 1823–1990’, Research School of Pacific Studies, Economics Division Working Paper, Southeast Asia 93/2 (Canberra 1993) 30.Google Scholar

2 Eng, Pierre van der, ‘Exploring Exploitation: The Netherlands and Colonial Indonesia 1870–1940’, Revista de Historia Económica 16 (1998) 311–315.Google Scholar

3 Annual average growth of per capita GDY (GDP in constant prices, corrected for changes in the barter terms of trade) during 1900–1929 was 1.1 per cent per year, compared to 1.6 per cent GDP growth. Eng, Pierre van der, ‘Indonesia's Growth Performance in the 20th Century’ in: Angus Maddison, D.S. Prasada Rao and Shepherd, W.F. eds, The Asian Economies in the Twentieth Century (Cheltenham 2002) 157Google Scholar.

4 These are very rough and preliminary estimates and have to be taken with extreme caution. The estimate of private investment is likely to be too high up to the 1980s, although the estimate for public investment is likely to be much too low. A comparison of Tables 2 and 3 shows significant differences in the ratios of exports and GDP.

5 Booth, Anne, The Indonesian Economy in the Nineteenth and Twentieth Centuries: A History of Missed Opportunities (London 1998) 89–134.CrossRefGoogle Scholar

6 Eng, Pierre van der, ‘Food for Growth: Trends in Indonesia's Food Supply, 1880–1995’, Journal of Interdisciplinary History 30 (2000) 591–616.Google Scholar

7 Eng, Van der, ‘Food’, 596.Google Scholar

8 Eng, Pierre van der, ‘Bridging a Gap: A Reconstruction of Population Patterns in Indonesia, 1930–1961’, Asian Studies Review 26 (2002) 503.CrossRefGoogle Scholar

9 Some would argue that educational attainment is a proxy for human capital formation and a contributing factor to economic growth and productivity change, or the lack of both. However, studies of the contribution of education to economic growth in the United States raise substantial doubts about the immediate relevance of the cognitive content of formal education to the processes through which the productivity of the workforce was being enhanced. In fact, accumulation of work force experience was found to be a more important determinant of differential earnings. See Mozes Abramovitz and David, Paul, ‘Two Centuries of American Macroeconomic Growth: From Exploitation of Resource Abundance to Knowledge-Driven Development’, Stanford Institute for Economic Policy Research Discussion Paper 01–05 (Stanford 2001) 157.Google Scholar Hence, educational attainment is perhaps more relevant as an indicator of the standard of living.

10 Human Development Report 1993 (New York 1993) 136–137.Google Scholar

11 Human Development Report 2000 (New York 2000) 189.Google Scholar

12 Touwen, Jeroen, Extremes in the Archipelago: Trade and Economic Development in the Outer Islands of Indonesia, 1900–1942 (Leiden 2001).Google Scholar

13 Williamson, Jeffrey G., ‘Regional Inequality and the Process of National Development’, Economic Development and Cultural Change 13 (1965) 3–45.CrossRefGoogle Scholar

14 Akita, Takahiro and Lukman, Rizal Affandi, ‘Interregional Inequalities in Indonesia: A Sectoral Decomposition Analysis for 1975–92’, Bulletin of Indonesian Economic Studies 31/ 2 (1995) 61–81.CrossRefGoogle Scholar

15 Gerschenkron, Alexander, Economic Backwardness in Historical Perspective (Cambridge, MA 1962).Google Scholar