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Economic Growth and Sustainable Development in Indonesia: An Assessment

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  • Robi Kurniawan
  • Shunsuke Managi

Abstract

We explore the nexus between sustainability and economic growth in Indonesia between 1990 and 2014, using an inclusive wealth framework that covers the country’s unique resources and biodiversity. Indonesia’s inclusive wealth growth is considered positive. However, the ‘dilution effect’ on Indonesia’s population has outpaced the country’s wealth growth, so that its per capita inclusive wealth growth has been negative. This study implies that the GDP per capita growth in Indonesia does not necessarily indicate sustainability. The depreciation of both renewable and non-renewable natural capital is driving the decline in wealth per capita. Despite this, sustainability has been improving, although marginally, due to increases in the rates of produced and human capital growth. To return to a sustainable growth path, Indonesia must increase its investments to a net gain in the rate of wealth growth, and it must reduce its resource extraction to levels that its productive base can maintain.

Suggested Citation

  • Robi Kurniawan & Shunsuke Managi, 2018. "Economic Growth and Sustainable Development in Indonesia: An Assessment," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 54(3), pages 339-361, September.
    • Handle: RePEc:taf:bindes:v:54:y:2018:i:3:p:339-361
    DOI: 10.1080/00074918.2018.1450962
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    Cited by:

    1. Rasoulinezhad, Ehsan & Sung, Jinsok & Talipova, Amina & Taghizadeh-Hesary, Farhad, 2022. "Analyzing energy trade policy in Central Asia using the intercountry trade force approach," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 441-454.
    2. Sugiawan, Yogi & Kurniawan, Robi & Managi, Shunsuke, 2019. "Are carbon dioxide emission reductions compatible with sustainable well-being?," Applied Energy, Elsevier, vol. 242(C), pages 1-11.
    3. Jules René Minkoua Nzié & Ateh Thomson Pepeah, 2022. "Are natural resources an impetus for economic growth in Africa?," Natural Resources Forum, Blackwell Publishing, vol. 46(1), pages 136-153, February.
    4. Herdis Herdiansyah & Randi Mamola & Ninin Ernawati, 2024. "Intragenerational Dynamics in the Indonesian Oil Palm Growth Zone: The Resolution between Circular Dimensions and Human Capital," Sustainability, MDPI, vol. 16(8), pages 1-19, April.
    5. Topcu, Ebru & Altinoz, Buket & Aslan, Alper, 2020. "Global evidence from the link between economic growth, natural resources, energy consumption, and gross capital formation," Resources Policy, Elsevier, vol. 66(C).
    6. Azam, Anam & Ateeq, Muhammad & Shafique, Muhammad & Rafiq, Muhammad & Yuan, Jiahai, 2023. "Primary energy consumption-growth nexus: The role of natural resources, quality of government, and fixed capital formation," Energy, Elsevier, vol. 263(PA).
    7. Beatriz Barrado & Gregorio Gimenez & Jaime Sanaú, 2021. "The Use of Decomposition Methods to Understand the Economic Growth Gap between Latin America and East Asia," Sustainability, MDPI, vol. 13(12), pages 1-18, June.
    8. Mehmet Çağlar & Cem Gürler, 2022. "Sustainable Development Goals: A cluster analysis of worldwide countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(6), pages 8593-8624, June.
    9. Li, Yurog & Cong, Zhenglong & Xie, Yufan & Wang, Yan & Wang, Hongmei, 2022. "The relationship between green finance, economic factors, geopolitical risk and natural resources commodity prices: Evidence from five most natural resources holding countries," Resources Policy, Elsevier, vol. 78(C).
    10. Kurniawan, Robi & Managi, Shunsuke, 2018. "Coal consumption, urbanization, and trade openness linkage in Indonesia," Energy Policy, Elsevier, vol. 121(C), pages 576-583.
    11. Yutaka Erwan & John Henry Wijaya, 2020. "Application of Basel III on health level in banking sub sector company," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 70-79, April.
    12. Shang Xu & H. Allen Klaiber & Daniela A. Miteva, 2023. "Impacts of forest conservation on local agricultural labor supply: Evidence from the Indonesian forest moratorium," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(3), pages 940-965, May.
    13. Xiaohui Chen & Yiqing He, 2022. "The Impact of Financial Resilience and Steady Growth on High-Quality Economic Development—Based on a Heterogeneous Intermediary Effect Analysis," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    14. Cosma Ioana Gabriela & David Katalin Gabriela & Antonescu Daniela & Dumiter Florin Cornel & Jimon Ștefania Amalia, 2020. "The Correlation Between CO2 Emissions and GDP in a Sustainable Development Framework Using Kuznets Environment Curve," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 30(4), pages 1-23, December.

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