Moving towards a better nation: resolving Indonesia's major economic obstacles
Date of Issue2014
S. Rajaratnam School of International Studies
Indonesian economy has risen significantly since Asian financial crisis hit the nation in 1997-1998. 15 years after the crisis, Indonesia's average GDP growth was 5.4 percent, which was a tremendous rebound from -13% GDP growth in 1998. During global economic crisis between the years 2007 to 2010, Indonesia did slightly better compared to other nations. It was also one of the countries that had positive economic growth besides People's Republic of China and India. However, with huge natural resources such as natural gas, coal, gold, other commodities and massive population, Indonesia should have had much higher growth than what it has accomplished. It is capable of having an average of 8 percent growth in the past 12 years. Yet despite of its abundant resources, Indonesia is unable to place itself in line with other countries to reach higher economic growth and could not optimize the benefit of flourished world economy between the years 2001 to 2007. This dissertation poses the following question: after 69 years of independence why Indonesia's economy is progressing at slower than expected rate. In answering this question the study examines some of the major obstacles that have hindered economic growth and prevents Indonesia from taking advantage of large resources base and human capital in the country.