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Capital Formation and Capital Stock in Indonesia, 1950-2007

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  • Pierre van der Eng

Abstract

This paper presents long-term estimates of gross fixed capital formation for 1951-2007 that are disaggregated by categories of productive assets. These data, combined with approximations of probable average asset lives and a feasible asset retirement method are used in a Perpetual Inventory Method to estimate gross fixed capital stock in Indonesia for 1950-2007 disaggregated by productive assets. Most of Indonesia’s capital stock long consisted of residential and non-residential structures. Total capital stock grew significantly since the late-1960s at about 10% per year, until the 1997-98 economic crisis. The high capital-output ratio in 1997 suggests that part of Indonesia’s high economic growth during the 1990s was due to unsustainable resource accumulation.

Suggested Citation

  • Pierre van der Eng, 2008. "Capital Formation and Capital Stock in Indonesia, 1950-2007," Departmental Working Papers 2008-24, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2008-24
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2008/wp_econ_2008_24.pdf
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    References listed on IDEAS

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    1. Gunawan Wicaksono & Eko Ariantoro & A. Reina Sari, 2002. "PENGHITUNGAN DATA STOK KAPITAL DENGAN METODE PERPETUAL INVENTORY (PIM) (Suatu Upaya Penyediaan Data Stok Kapital untuk Penghitungan Potensial Output dengan Pendekatan Fungsi Produksi)," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 5(2), pages 1-38, September.
    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. King, Robert G. & Levine, Ross, 1994. "Capital fundamentalism, economic development, and economic growth," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 259-292, June.
    4. Yoichiro Ishihara & Daan Marks, 2005. "Capacity Utilization in Indonesia: Time to Invest," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 53, pages 279-292, December.
    5. 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.
    6. Pierre van der Eng, 1999. "Some Obscurities in Indonesia's New National Accounts," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(2), pages 91-106.
    7. Gunawan Wicaksono & Eko Ariantoro, 2003. "Pengujian Validitas Data Stok Kapital Dan Perkembangan Stok Kapital Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 6(3), pages 1-10, December.
    8. 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(2), pages 135-204.
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    Cited by:

    1. Pierre van der Eng, 2009. "Capital formation and capital stock in Indonesia, 1950-2008," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 45(3), pages 345-371.
    2. Matthias Meier & Ariel Mecikovsky & Christian Bayer, 2014. "Dynamics of Factor Productivity Dispersions," 2014 Meeting Papers 719, Society for Economic Dynamics.

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    More about this item

    Keywords

    investment; capital formation; capital stock; economic growth; Indonesia;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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