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

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  • Armida Alisjahbana

    (Department of Economics, Padjadjaran University)

  • Viktor Pirmana

    (Department of Economics, Padjadjaran University)

Abstract

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.

Suggested Citation

  • Armida Alisjahbana & Viktor Pirmana, 2015. "Assessing Indonesia’s Long Run Growth: The Role of Total Factor Productivity and Human Capital," Working Papers in Economics and Development Studies (WoPEDS) 201503, Department of Economics, Padjadjaran University, revised Oct 2015.
    • Handle: RePEc:unp:wpaper:201503
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic Growth; Total Factor Productivity; Human Capital; Indonesia 2035;
    All these keywords.

    JEL classification:

    • 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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