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Assessing Indonesia’s Long Run Growth: The Role of Total Factor Productivity and Human Capital

Listed author(s):
  • Armida Alisjahbana


    (Department of Economics, Padjadjaran University)

  • Viktor Pirmana


    (Department of Economics, Padjadjaran University)

This paper revisits Indonesia’s long run growth trajectory with particular emphasis on the contribution of human capital accumulation and Total Factor Productivity for the period 2000-2035. The study utilizes the growth accounting framework that estimates contribution of growth in capital stock, human capital, and Total Factor Productivity (TFP) for the period after Indonesia’s crisis of 1997- 1998. This study extends an earlier study by Alisjahbana (2009) in methodology, and emphasis in the role of human capital to long term growth trajectory. The period of analysis is concentrated from the year 2000 onwards with the following periodization: 2000-2004 (economic stabilization period); 2005-2009 (President SBY First Administration); 2010-2014 (President SBY Second Administration) and the overall period from 2000-2014. Based on the earlier study, it is expected that the pattern of sources of growth post crisis will be enhanced, in which TFP growth and the role of human capital have become more prominent. Results of the sources of economic growth during the 2000-2014 periods are used to project Indonesia’s long run growth trajectory until 2035. The study utilizes the most recent relevant data sets such as Indonesia’s population projection 2010- 2035. The study also benefits from the most current government long-term policy direction in human resources development as well as human capital accumulation.

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Paper provided by Department of Economics, Padjadjaran University in its series Working Papers in Economics and Development Studies (WoPEDS) with number 201503.

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Length: 23 pages
Date of creation: Oct 2015
Date of revision: Oct 2015
Handle: RePEc:unp:wpaper:201503
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  1. Claudio E. Montenegro & Harry Anthony Patrinos, 2014. "Comparable Estimates of Returns to Schooling Around the World," Working Papers wp390, University of Chile, Department of Economics.
  2. Scott L. Baier & Gerald P. Dwyer & Robert Tamura, 2006. "How Important are Capital and Total Factor Productivity for Economic Growth?," Economic Inquiry, Western Economic Association International, vol. 44(1), pages 23-49, January.
  3. Illing, Mark & Liu, Ying, 2006. "Measuring financial stress in a developed country: An application to Canada," Journal of Financial Stability, Elsevier, vol. 2(3), pages 243-265, October.
  4. 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.
  5. Nadežda Sinenko & Deniss Titarenko & Mikus Arinš, 2013. "The Latvian financial stress index as an important element of the financial system stability monitoring framework," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(2), pages 85-110, December.
  6. Miroslav Misina & Greg Tkacz, 2009. "Credit, Asset Prices, and Financial Stress," International Journal of Central Banking, International Journal of Central Banking, vol. 5(4), pages 95-122, December.
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