The Indonesian Development Effort: The First Successful Year

To an Indonesian, in particular to an Indonesian economist, it certainly feels good to be able, for once, to tell a success story about the Indonesian economy. Ever since independence in 1945 economic events in Indonesia have consisted of a series of unsuccessful attempts toward (rehabilitation, stability, and development. As a matter of fact economic decline and stagnation dated as far back as the early 1930's, when Indonesia's major exports crumbled as a consequence of the Great Depression. Until this very moment a number of Indonesia's main export products have never regained their prewar peak level, and over the years Indonesia has successively lost its position as the world's major exporter of sugar, copra, tea, and recently also of rubber. But apart from the Great Depression and the occupation period under the Japanese during the Second World War, the most dramatic event has been the hyperinflation of the years 1963-1966. The inflation started as a creeping one in the early 1950's but gradually it picked up speed and reached a crescendo during the first half of the 1960's. During the peak year of 1966 consumer prices rose by more than 635%. The rampant inflation brought industrial production to a halt and reduced normal trade to a bare minimum.