Asia Rising

Asia Rising

Growth and Resilience in an Uncertain Global Economy

Edited by Hal Hill and Maria Socorro Gochoco-Bautista

The centre of global economic activity is shifting rapidly towards Asia, driven by a combination of the economic dynamism of China, India and other middle-income Asian countries, and sluggish growth in the OECD economies. The rapid growth and rising global prominence has raised a range of major challenges for Asia and for the rest of the world. This comprehensive, forward-looking book examines these issues through in-depth studies of major Asian economies and an analysis of the key development policy options.

Chapter 9: Indonesia

Ari Kuncoro

Subjects: asian studies, asian development, development studies, asian development


Before the Asian financial crisis (AFC), Indonesia and other East Asian economies had been the model of successful economic development. Investment is believed to have been one of the key elements of this success. But high investment growth and the availability of savings are not sufficient explanations for the rapid and sustained growth of these economies and the subsequent reduction of poverty. While investment and savings contribute to high growth, it is achieved largely by getting the basics right (Basri and Hill 2011). Another key to success is often thought to be economic liberalization that brings both competition and external trade, which also are essential to rapid economic growth and stability (Kuncoro and Resosudarmo 2006). The AFC, however, raises many questions about the success of East Asian economies. And while there is some disagreement about the role of competitiveness and trade in fostering growth, the high growth rates prior to the AFC often mask many country- specific characteristics that spur growth.

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