Indonesia is one country that has experienced rapid economic development over the last 50 years and a substantial democratisation since the Asian Financial Crisis of twenty years ago.
Together with Andy Sumner and Arief Yusuf, I argue that Indonesia achieved substantial structural transformation not only during the heydays of industrialisation but also more recently. Indeed, the transformation is more substantial than a simple glance at the composition of GDP by aggregate sectors would suggest.
We find that in Indonesia most change is now happening intrasectorally: Within the industry sector, for example, there has been a large increase in the construction sector share alongside a large decrease in the manufacturing sector share. In short, a deindustrialisation process alongside a building boom.
What are the socio-economic implications of this trend? We outline a new concept of inclusive structural transformation and define this as a condition where economic opportunities are both sustainable and are reaching a broad part of the labour force.
We find that recent structural transformation in Indonesia has, indeed, been sustainable but it has not been broad-based.
This is because less-educated workers have generally not benefited from economic change to the same extent as high-skilled ones. How to ensure employment creation for less-educated workers thus remains a substantial challenge for Indonesia like many developing countries.
Kyunghoon Kim is a PhD student at King’s Department of International Development. His research focuses on the role of state-owned enterprises on economic development in Southeast Asia.
|Kyunghoon Kim, Andy Sumner and Arief Anshory Yusuf||How Inclusive is Structural Change? The Case of Indonesia||29/09/2017|
|Kyunghoon Kim, Andy Sumner and Arief Anshory Yusuf||A Job-centered View of Inclusive Structural Transformation||10/11/2017|