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Revisiting Indonesia’s Sources of Economic Growth and Its Projection Towards 2030

Author

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  • Armida Alisjahbana

    (Department of Economics, Padjadjaran University)

Abstract

This paper revisits Indonesia’s sources of economic growth using the Growth Accounting Framework with education adjusted employment for period 1971-2007. The study estimates contribution of growth in capital stock, human capital and Total Factor Productivity (TFP) during the period before and after the crisis. TFP played positive but minor role in Indonesia’s economic growth before the crisis. Growth in capital stock had been the main driver, attributing between 50-70% of growth. Growth in human capital accounted for another 30%. The pattern of sources of growth has changed substantially post crisis. TFP growth has played a more significant role, whereas capital stock growth has been increasing but at a meager pace. Human capital has consistently contributed about 30% to the overall growth. The roles of capital stock growth, human capital growth and TFP have been on a more equal footing after post-crisis. If this trend persists, it will have profound implication on the driver of Indonesian economy’s growth in the future and its trajectory projection towards 2030.

Suggested Citation

  • Armida Alisjahbana, 2009. "Revisiting Indonesia’s Sources of Economic Growth and Its Projection Towards 2030," Working Papers in Economics and Development Studies (WoPEDS) 200905, Department of Economics, Padjadjaran University, revised Jul 2009.
    • Handle: RePEc:unp:wpaper:200905
    as

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    File URL: http://ceds.feb.unpad.ac.id/wopeds/200905.pdf
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    References listed on IDEAS

    as
    1. Hill,Hal, 2000. "The Indonesian Economy," Cambridge Books, Cambridge University Press, number 9780521663670.
    2. Pierre van der Eng, 2005. "Indonesia's new national accounts," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(2), pages 243-252.
    3. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 641-680.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Armida Alisjahbana & Viktor Pirmana, 2015. "Assessing Indonesia’s Long Run Growth: The Role of Total Factor Productivity and Human Capital," Working Papers in Economics and Development Studies (WoPEDS) 201503, Department of Economics, Padjadjaran University, revised Oct 2015.
    2. Ross Garnaut, 2015. "Indonesia'S Resources Boom In International Perspective: Policy Dilemmas And Options For Continued Strong Growth," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 51(2), pages 189-212, August.
    3. Heru Iswahyudi, 2016. "Back to oil: Indonesia economic growth after Asian financial crisis," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 8(1), pages 25-44, April.

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    More about this item

    Keywords

    Economic growth; Total Factor Productivity; Indonesia 2030;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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