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Labour-Intensive Industrialisation in Indonesia, 1930-1975: Output Trends and Government Policies


  • Pierre van der Eng



Growth of industrial output for domestic consumption during 1930-75 was significant, but not continuous; growth (1932-41) was followed by decline (1942-46), recovery (1947-57), stagnation (1958-65) and acceleration (1966-75). Protective trade policies triggered growth in the 1930s, when industry policy favoured a balanced development of capital-intensive large and medium-sized ventures and labour-intensive small firms and firms in light industries. The gist of this policy continued during the late-1940s and 1950s, but industry policies increasingly favoured large, capital-intensive stateowned enterprises. By 1960, policies no longer targeted small ventures and labour-intensive industrialisation. After 1966, economic stabilisation and deregulation rekindled the momentum of industrialisation. Although policy interest in the development of small industrial ventures revived in 1975, large-scale labour-intensive industrialisation did start until the mid-1980s.

Suggested Citation

  • Pierre van der Eng, 2008. "Labour-Intensive Industrialisation in Indonesia, 1930-1975: Output Trends and Government Policies," Departmental Working Papers 2008-20, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2008-20

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    References listed on IDEAS

    1. Sato, Yuri, 2000. "How did the crisis affect small and medium-sized enterprises? -- from a field study of the metal-working industry in Java," The Developing Economies, Institute of Developing Economies, Japan External Trade Organization(JETRO), vol. 38(4), pages 572-595, December.
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    7. Prema-chandra Athukorala & Budy P. Resosudarmo, 2005. "The Indian Ocean Tsunami: Economic Impact, Disaster Management and Lessons," Departmental Working Papers 2005-05, The Australian National University, Arndt-Corden Department of Economics.
    8. Hung-ju Chen & Hsiao-tang Hsu, 2005. "The Role Of Firm Size In Controlling Output Decline During The Asian Financial Crisis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(2), pages 103-129, December.
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    Cited by:

    1. Pierre van der Eng, 2008. "The sources of long-term economic growth in Indonesia, 1880-2007," ANU Working Papers in Economics and Econometrics 2008-499, Australian National University, College of Business and Economics, School of Economics.

    More about this item


    Manufacturing industry; Indonesia; industry policy; technological change;

    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East

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