When did Indonesia de-industrialise? Long-term trends in industrialisation

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 10 December 2019
2.00pm–3.30pm

Venue

Griffin Room, Level 1, #132 Crawford Building, Lennox Crossing, The ANU

Speaker

Pierre van der Eng, Research School of Management, CBE, The ANU

Contacts

Ross McLeod, Seminar Convener, ACDE

This paper tests the thesis that colonised, less-developed countries in Asia experienced ‘de-industrialisation’ and that this perceived outcome of colonisation long persisted after independence. It does this on the basis of new long-term annual estimates of value added in Indonesian manufacturing during 1870-2018.

Manufacturing output grew on average by 4 per cent per year during 1870-1929, which compares to 2 per cent in India and 6 per cent in Japan. Manufacturing output stagnated during 1929-68, before accelerating to 11 per cent per year during 1968-97 and slowing to 5 per cent during 1999-2018. There were three episodes of ‘de-industrialisation’ when the manufacturing share of GDP decreased: the economic crisis 1929-35, the Japanese occupation and war of independence 1942-47, and the recent period 2004-18.

The paper explains long-term trends in industrialisation on the basis of sustained volatility in the terms-of-trade and real effective exchange rate, and the consequences of trade and industry policies that fostered import-substituting industrialisation during the 1930s-80s and export-oriented industrialisation since.

Pierre van der Eng is Associate Professor and Reader in International Business at the ANU Research School of Management.

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