J. Thomas Lindblad

Technological Development and Economic Growth in Indonesia and Thailand since 1950

This paper compares long-run economic growth in Indonesia and Thailand as related to technological progress during the second half of the twentieth century. It adopts a two-stage approach. It first provides an estimation of long-run total factor productivity differentials between the two countries then offering an in-depth analysis of this differential and associated trends and policies concerning, amongst others, capital goods imports, foreign direct investment and R&D expenditure. The paper argues that technological progress shaped by official policies and the institutional framework of absorption sufficiently explains why outcomes have differed so substantially in Thailand and Indonesia despite apparently similar initial conditions of long-run economic growth. Macroeconomic policies need to pay explicit attention to the acquisition of modern technologies in order for rapid economic growth to be sustained.

Economic Growth and Decolonisation in Indonesia

The economist Hal Hill begins his authoritative survey of the Indonesian economy under Soehartos “New Order” ( Orde Baru ) government with quotes from leading development economists, who are singularly pessimistic about the prospects for economic growth in Indonesia. A negative assessment such as that given by Swedish Nobel Prize Laureate Gunnar Myrdal is understandable as he was writing at the time of the severe economic crisis accompanying the eclipse of Sukarnos “Old Order” ( Orde Lama ) in the mid-1960s. More surprising is the verdict of Benjamin Higgins, known to have coined the expression “chronic dropout” for Indonesia. Higgins had spent quite a bit of time in Indonesia in the early 1950s as an advisor from the World Bank. Was his harsh verdict, akin to the oft-heard epithet “perpetual underachiever”, based on his own personal observations in the newly independent nation, or was his judgement also coloured by the near-collapse of the economy in the mid-1960s? The received dismal view of Indonesias economic performance under Sukarno forms the logical point of departure for this article.

The Petroleum Industry in Indonesia before the Second World War

The present dependence on oil exports in Indonesia is not new. The oil industry also played a key role in the colonial economy. This article examines the development of the Indonesian oil industry up to the Second World War. It identifies producers and production centres and considers trends in Output and revenue, changes in the product mix and possible growth effects. Its main question concerns the possibilities and limitations of the oil sector for sustaining economic growth.

THE IMPORTANCE OF INDONESIANISASI DURING THE TRANSITION FROM THE 1930s TO THE 1960s

The term indonesianisasi stands for the removal of Dutch tutelage and a subsequent fundamental reorientation of the economy of Indonesia at the time of decolonisation and during the years immediately after Dutch acknowledgement of Indonesian independence in December 1949. The term was initially used in a narrow sense designating the replacement of Dutch officials and managers by Indonesian nationals in the government bureaucracy and private firms in Indonesia during the years leading up to the nationalisation of remaining Dutch business assets in Indonesia in December 1957. There is a growing appreciation that the term needs to be applied i n a broader sense as the transfer of economic leadership in newly independent Indonesia with profound consequences for future economic development. This article forms a first exploration of the application of the term indonesianisasi in such a broad sense. It should be emphasised, therefore, that this is a starting-point of new research rather than the outcome of a completed undertaking.

Indonesian economic decolonization in regional and international perspective

This collection of essays provides insights into the complex process of economic decolonization in Indonesia from a variety of perspectives. The emancipation from Dutch colonialism in the economic sphere is linked to the unique features of the new nation-state emerging in newly independent Indonesia. This included a key role in business for the military. A key part was also played by indigenous Indonesian business firms that were shaped by the Japanese occupation and the Indonesian Revolution.

Foreign Investment in Southeast Asia in Historical Perspective

This paper places todays spectacular boom in foreign investment throughout Southeast Asia in its appropriate historical perspective. It contrasts the most authoritative statistical evidence pertaining to the late 1930s and the late 1980s and identifies features of change and continuity between the late-colonial period and today. It is observed that nationalities of investors and targets of foreign investment have changed dramatically whereas the hierarchy of recipients, the investment climate and the function of foreign investment in the host country economy all display a certain continuity. The salient question is whether the impact of contemporary foreign investment on economic growth in the host country will be more lasting than was the case in colonial days.

FOREIGN DIRECT INVESTMENT IN INDONESIA: FIFTY YEARS OF DISCOURSE

The topic of foreign direct investment (FDI) has been prominent in assessments of economic development in Indonesia during the past 50 years. In this article I review Indonesias FDI record in a historical perspective; the current urge to control FDI inflows and the need to augment domestic savings and facilitate technology transfers are not at all new in Indonesia. I draw in particular on the discourse on FDI in this journal, the Bulletin of Indonesian Economic Studies, giving special attention to contributions by this journal to the international literature on FDI and its impact. The article demonstrates that the relation between FDI and economic growth has been less straightforward in Indonesia than elsewhere in Southeast Asia. Although FDI has grown in a restrictive investment climate, on occasion it has failed to do so despite more liberal conditions. This may be attributed to the sustained role of natural resources in determining Indonesias attractiveness as a host country of FDI.

Korean Investment in Indonesia: Survey and Appraisal

This article offers the first systematic survey of Korean direct investment in Indonesia as it has developed during the past three decades. The survey includes a chronology and an overview based on macro level statistics. An assessment of the potential contribution of Korean direct investment to the Indonesian economy draws on both a corporate profile embracing a large number of companies and evidence from a small sample of selected individual firms. The article stresses a fundamental diversity in Korean investment in Indonesia that translates as potential benefits in terms of both new employment creation and technology transfers.

Indonesia and China Today

There is a lively debate about the ‘China effect’ on economies in Southeast Asia that have embarked on industrialization in recent years.Will rapid growth and structural transformation of the Chinese economy undermine competitiveness in international markets of a low-wage country like Indonesia? This contribution focuses on the new challenges faced by industrialization policies in Indonesia with specific attention given to Chinese exports of similar types of products. Statistics on trade flows and revealed comparative advantage are discussed.This article also contains a historical background referring to two separate themes. The first concerns the economic position of Indonesians of Chinese descent, which goes far back in history. What does the ‘China effect’ mean to Indonesia, keeping in mind that a significant part of the Indonesian economy is dominated by Chinese Indonesians? Second, the necessity of an accelerated industrialization is considered in the context of the extreme dependence on world markets for an economy rich in natural resources like the Indonesian one. Does industrialization in competition with China imply exchanging one type of dependence for another?

Current Trends in the Economic History of Southeast Asia

New winds are blowing in the writing of the economic history of Southeast Asia. The traditional Eurocentric perspective of the colonial economy is gradually giving way to a more Asian perspective stressing similarities and mutual links within the region itself. The issue of Western expansion now appears less vital than long-run economic developments in the Asian economies. Political power struggles in colonial relation ships are squeezed aside and replaced by a more quantification and an increasing appreciation of dynamic change that does not readily fit into the model of Western style modernization.1 The aim of this article is to discuss some positions and direc tions that have come to the fore in the economic history of Southeast Asia in recent years. Without claiming to offer a full coverage of the field, it is believed that trends thus identified may suggest, at least in part, the future course of Southeast Asian economic history. Three questions are raised in this contribution. First, what are, broadly speaking, the types of topics attracting attention in todays Southeast Asian economic history? Tentative indications are inferred from a quick glance at articles published and books reviewed in the Journal of Southeast Asian Studies during the last twelve years. The second question shifts the emphasis from historiography to methodology focusing on new perspectives adopted in the analysis of Southeast Asian economic history, in par ticular the comparative intra-Asian perspective. The third and final question refers to new interpretations arising from current research findings. This is illustrated by look ing more closely at the specific topic of economic expansion during the late-colonial era, in particular the early twentieth century. A number of limitations of this survey should be noted. Economic history is con ceived in a rather conventional fashion excluding for instance numismatic analysis of archaeological finds, socio-economic studies heavily geared towards sociological applications and current economic affairs. In addition this survey is virtually confined to research results presented in English. A fuller account should obviously include publications in other European languages, Japanese and the vernacular languages of