Indonesia was characterized as a ‘chronic economic dropout’ according to the most widely used development economics textbook in the 1960s. However, since the late 1960s it has grown rapidly, such that most comparative assessments judge it to be among a small group of (mainly East Asian) economies to have achieved historically unprecedented growth rates. Over the past half-century Indonesia has also experienced a deep economic and political crisis, including a temporary growth collapse of about 20 percentage points followed by a sudden and rapid transition from centralised, authoritarian rule to decentralised, democratic rule. Thus there are two main development episodes over this period, 1966-97 and 1999 to the present, with very different political and institutional arrangements between the two.

This paper examines these two episodes, investigating in particular the continuities and changes, and asks whether the abrupt transition to democracy introduced a discontinuity in economic policy making and socio-economic outcomes. The analysis is undertaken with reference to a range of variables, including growth dynamics, economic resilience, macroeconomic policies, openness to the global economy and distributional outcomes. These outcomes are then linked to the prevailing political economy processes of the two periods. The conclusion, perhaps surprising, is that, in comparing these two episodes, the continuities are arguably more important than the differences.