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The sources of long-term economic growth in Indonesia, 1880-2007

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Author Info
Pierre van der Eng ()

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Abstract

This paper initiates discussion about the contribution of Total Factor Productivity (TFP) growth to Indonesia’s long-term economic growth. It presents new time series estimates of GDP, capital stock and education-adjusted employment, and offers a growth accounting approach that estimates the contribution of conventional factor inputs to GDP growth during 1880-2007. For most of the period, the growth of employment, educational attainment and particularly capital stock explained almost all of long-term output growth, and TFP growth was marginal. During the key growth periods 1900-29 and 1967-97, TFP growth was on balance negative, respectively marginally positive. However, the contribution of TFP growth was substantial during some sub-periods, particularly 1933-41, 1951-61, 1967-73 and 2000-07. Each of these followed a major economic downturn that slowed capital stock growth and required a more efficient use of productive resources, assisted by changes in economic policy and institutions that enhanced productivity and efficiency.

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Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANUCBE School of Economics Working Papers with number 2008-499.

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Length: 35 Pages
Date of creation: Dec 2008
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Handle: RePEc:acb:cbeeco:2008-499

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Find related papers by JEL classification:
N15 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - Asia including Middle East
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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  1. Susan M. Collins & Barry P. Bosworth, 1996. "Economic Growth in East Asia: Accumulation versus Assimilation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-2), pages 135-204. [Downloadable!]
  2. Scott L. Baier & Gerald P. Dwyer, Jr. & Robert Tamura, 2002. "How important are capital and total factor productivity for economic growth?," Working Paper 2002-2a, Federal Reserve Bank of Atlanta. [Downloadable!]
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  3. Bosworth, B. & Collins, S.M. & Chen, Y.C., 1995. "Accounting for Differences in Economic Growth," Papers 115, Brookings Institution - Working Papers.
  4. Paul A. David, 2005. "Two Centuries of American Macroeconomic Growth From Exploitation of Resource Abundance to Knowledge-Driven Development," Macroeconomics 0502021, EconWPA. [Downloadable!]
  5. van der Eng, Pierre, 1992. "The real domestic product of Indonesia, 1880-1989," Explorations in Economic History, Elsevier, vol. 29(3), pages 343-373, July. [Downloadable!] (restricted)
  6. Michael Sarel, 1997. "Growth and Productivity in ASEAN Countries," IMF Working Papers 97/97, International Monetary Fund.
  7. Maddison, Angus, 1987. "Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 649-98, June. [Downloadable!] (restricted)
  8. Virginie Vial, 2006. "New Estimates Of Total Factor Productivity Growth In Indonesian Manufacturing," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 42(3), pages 357-369, December. [Downloadable!] (restricted)
  9. Young, Alwyn, 1994. "Accumulation, exports, and growth in the high performing Asian economies : A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 237-250, June. [Downloadable!] (restricted)
  10. Pierre van der Eng, 2008. "Labour-Intensive Industrialisation in Indonesia, 1930-1975: Output Trends and Government Policies," Departmental Working Papers 2008-20, Australian National University, Economics RSPAS. [Downloadable!]
  11. Pierre Eng, 1999. "Some Obscurities in Indonesia's New National Accounts," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 35(2), pages 91-106, August. [Downloadable!] (restricted)
  12. Pierre van der Eng, 2005. "Indonesia's new national accounts," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 41(2), pages 243-252, August. [Downloadable!] (restricted)
  13. Haryo Aswicahyono & Hal Hill, 2002. "'Perspiration' versus 'inspiration' in Asian industrialisation: Indonesia before the crisis," The Journal of Development Studies, Taylor and Francis Journals, vol. 38(3), pages 138-163, February. [Downloadable!] (restricted)
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