Transforming Indonesia: Structural Change from a Regional Perspective, 1968–2010

Abstract

Since 1968, Indonesia has been among the few developing countries able to sustain per capita income growth over 5 per cent. However, poverty and surplus labour are still the main features of the economy. Chapter 11 asks to what extent the dual nature of growth has stimulated structural change—or has it just rewarded a particular sector or region? We find that the emblematic State support to agriculture has not tapped the potential growth in labour reallocation. Despite the income diversification within and outside agriculture, the linkages between sectors and regions remain weak. In order to catch up, the integration of the outer regions into the economy must still take place in agriculture, investment in human capital, infrastructure, social policies and local capabilities.