The Role of Sumatra in the Integration of the Indonesian Economy into the World Economy from Two Waves of Globalization

This study is aimed at investigating the role of the Sumatran economy in integrating the Indonesian economy with the rest of the world, both from a historical perspective and from the current policies that are shaping the future of Sumatra, including the current condition of the business environment in Indonesia and Sumatra. Literature review and a simple descriptive statistics are employed to give a better understanding of the past and current conditions. Some interesting findings include: first, from the two waves of globalization (1830-1914 and 1945-now), the Indonesian economy has been integrated and enjoyed gains by increasing its income through international linkages with the world economy while the de-globalization period during 1914-1945 was the time when Indonesia got pains from the international linkages. From an Indonesia regional perspective, Sumatra has advantages to be explored by Indonesia to integrate the Indonesian economy with the world market. This potential was recognized by the Dutch during its second wave of regional development in Dutch Colony (Indonesia) by developing the Sumatran economy after focusing in developing Java Island as the center of Dutch Colony in its first wave of development in Indonesia. In addition, the Indonesian government has also paid attention to the development of Sumatra through Development of Batam Island, IMS-GT (Indonesia Malaysia Growth Triangle) and IMT-GT (Indonesia Malaysia Thailand Growth Triangle). However, the current business environment in Indonesia and Sumatra for the time being is still facing some challenges to acquire the potentials