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The sources of long-term economic growth in Indonesia, 1880-2007

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  • Pierre van der Eng

Abstract

This paper initiates discussion about the contribution of Total Factor Productivity (TFP) growth to Indonesia’s long-term economic growth. It presents new time series estimates of GDP, capital stock and education-adjusted employment, and offers a growth accounting approach that estimates the contribution of conventional factor inputs to GDP growth during 1880-2007. For most of the period, the growth of employment, educational attainment and particularly capital stock explained almost all of long-term output growth, and TFP growth was marginal. During the key growth periods 1900-29 and 1967-97, TFP growth was on balance negative, respectively marginally positive. However, the contribution of TFP growth was substantial during some sub-periods, particularly 1933-41, 1951-61, 1967-73 and 2000-07. Each of these followed a major economic downturn that slowed capital stock growth and required a more efficient use of productive resources, assisted by changes in economic policy and institutions that enhanced productivity and efficiency.

Suggested Citation

  • Pierre van der Eng, 2008. "The sources of long-term economic growth in Indonesia, 1880-2007," ANU Working Papers in Economics and Econometrics 2008-499, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2008-499
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    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp499.pdf
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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. Agustín Bénétrix & Kevin O’Rourke & Jeffrey Williamson, 2015. "The Spread of Manufacturing to the Poor Periphery 1870–2007," Open Economies Review, Springer, vol. 26(1), pages 1-37, February.
    3. Szirmai, Adam, 2009. "Industrialisation as an engine of growth in developing countries," MERIT Working Papers 2009-010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Kevin Hjortshøj O'Rourke & Agustin S. Benetrix Jeffrey G. Williamson, 2012. "The Spread of Manufacturing to the Periphery 1870-2007: Eight Stylized Facts," Economics Series Working Papers 617, University of Oxford, Department of Economics.
    5. Szirmai, Adam, 2012. "Proximate, intermediate and ultimate causality: Theories and experiences of growth and development," MERIT Working Papers 2012-032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Mitsuhiko Kataoka, 2013. "Capital Stock Estimates by Province and Interprovincial Distribution in Indonesia," Asian Economic Journal, East Asian Economic Association, vol. 27(4), pages 409-428, December.
    7. repec:iis:dispap:iiisdp401 is not listed on IDEAS

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    More about this item

    JEL classification:

    • 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
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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