Pierre van der Eng

The real domestic product of Indonesia, 1880-1989

Abstract The article scrutinizes the existing estimates of domestic output in Indonesia and presents an alternative series of annual data for the period 1880–1989. Although the presented results are rudimentary, the article concludes that per capita domestic product increased by 1.5% per year during 1900–1929. It suggests that the acceleration was to a large extent due to the improvement of domestic transport infrastructure. For several reasons the country lost momentum between 1942–1967, until the rise of international oil prices triggered an unprecedented phase of economic growth in the years 1973–1989, during which per capita domestic output increased by 3.8% per year.

Top Incomes in Indonesia, 1920-2004

Using taxation and household survey data, this paper estimates top income shares for Indonesia during 1920-2004. Our results suggest that top income shares grew during the 1920s and 1930s, but fell in the post-war era. In more recent decades, we observe a sharp rise in top income shares during the late-1990s, coincident with the economic downturn, and some evidence that top income shares fell in the early-2000s. For pre-war Indonesia, we decompose top income shares by income source, and find that for groups below the top 0.5 percent, a majority of income was derived from wages. Throughout the twentieth century, top income shares in Indonesia have been higher than in India, broadly comparable to Japan, and somewhat lower than levels prevailing in the United States.

Food for growth: trends in Indonesia's food supply, 1880-1995.

A decline in Indonesias per capita rice supply until the 1970s was marginal in relation to food supply as a whole. Until the 1970s, trends were determined by non-rice food crops. Indonesia was long unable to satisfy an increase in the demand for food with a higher supply of rice. From 1905 to 1920, cassava products met the additional demand for carbohydrates, which grew with purchasing power. During the interwar years, per capita food supply decreased slightly, mainly because demand shifted from staple foods to cheap manufactures. From 1943 to 1970, Indonesia experienced a drastic fall in food supply per capita due to an acceleration in population growth, restrictive regulations imposed on food markets, and the general demise of the Indonesian economy. The upward trend in per capita food supply since the 1960s was caused largely by increases in rice production, generated by government support to rice farmers. Higher incomes brought an increased demand for food, which could be met with inexpensive rice.A decline in Indonesias per capita rice supply until the 1970s was marginal in relation to food supply as a whole. Until the 1970s, trends were determined by non-rice food crops. Indonesia was long unable to satisfy an increase in the demand for food with a higher supply of rice. From 1905 to 1920, cassava products met the additional demand for carbohydrates, which grew with purchasing power. During the interwar years, per capita food supply decreased slightly, mainly because demand shifted from staple foods to cheap manufactures. From 1943 to 1970, Indonesia experienced a drastic fall in food supply per capita due to an acceleration in population growth, restrictive regulations imposed on food markets, and the general demise of the Indonesian economy. The upward trend in per capita food supply since the 1960s was caused largely by increases in rice production, generated by government support to rice farmers. Higher incomes brought an increased demand for food, which could be met with inexpensive rice.

Capital Formation and Capital Stock in Indonesia, 1950-2008

Abstract This article presents long-term estimates of gross fixed capital formation, disaggregated by category of productive assets, for the period 1951–2008. These data, combined with approximations of probable average asset lives and a plausible asset retirement procedure, are used in a perpetual inventory method framework to estimate gross fixed capital stock in Indonesia for the years 1950–2008, disaggregated by productive asset category. Total capital stock grew significantly from the late 1960s, at about 10% per year, until the 1997–98 economic crisis. The high capital–output ratio in 1997 suggests that a significant part of Indonesias rapid economic growth during the 1990s was due to capital accumulation.This article presents long-term estimates of gross fixed capital formation, disaggregated by category of productive assets, for the period 1951-2008. These data, combined with approximations of probable average asset lives and a plausible asset retirement procedure, are used in a perpetual inventory method framework to estimate gross fixed capital stock in Indonesia for the years 1950-2008, disaggregated by productive asset category. Total capital stock grew significantly from the late 1960s, at about 10% per year, until the 1997-98 economic crisis. The high capital-output ratio in 1997 suggests that a significant part of Indonesias rapid economic growth during the 1990s was due to capital accumulation.

Business in Indonesia: New Challenges, Old Problems

This book examines Indonesias business environment since reformasi began in 1985 - what stayed the same, what changed, and would could change. Economic recovery has been hesitant. Regime change and political reform have created uncertainties that have deepened reluctance to invest. A raft of government-instigated changes have left their imprint: decentralization, privatization, new company legislation, anti-corruption efforts, nationalization of debt-ridden banks, and firms being forced into receivership. More cautious lending practices by remaining financial institutions have imposed a credit crunch. Increased worker militancy and minimum wage rises have led some international firms to reconsider their presence in Indonesia. Changes in the business environment have caused a redefinition of private enterprise-government relations, inducing firms to re-examine their organization and management. The book includes insights of distinguished and stimulating speakers from business, independent research organizations, and academic institutions in Indonesia, Australia and elsewhere.

Indonesia's new national accounts

This note addresses some of the main changes in Indonesias national accounts, from 2000. These have resulted in higher estimates of GDP and slightly higher rates of GDP growth. The changes are part of a regular cycle of revisions and improvements in national accounting by the central statistics agency, BPS. On the output side, the higher level of GDP in 2000 is mainly due to upward revisions of value added in manufacturing industry, banking and trade. On the expenditure side, the higher level is mainly due to an upward revision of exports and the introduction of an estimate of investment in inventories. The choice of a new base year has resulted in higher weights for sectors with relatively high growth. This explains the higher rates of total GDP growth during 2000–03.

Some Obscurities in Indonesia's New National Accounts

Indonesias national accounts are subject to regular revisions. Some of these revisions have resulted in different estimates of GDP on both the output and the expenditure side of the economy in overlapping years. Unfortunately, the explanations accompanying the published national accounts make it difficult to understand the exact reasons why this is so. This article explores the possible explanations. It also discusses the consequences of changes to the base year used in the calculation of constant price series. The paper draws attention to several new national accounting initiatives developed at Indonesias Central Statistics Agency that underscore the Agencys advanced professionalism in national accounting. It concludes with a call for greater openness in explaining national accounting procedures.

Bridging a Gap: A Reconstruction of Population Patterns in Indonesia, 1930-1961

The decade of the 1950s was relatively healthy and prosperous. Malaria had been in considerable part eliminated; food was far more available than in the 1940s, according to the recollections of those who passed through these periods (unfortunately, one of the evils of war and revolution, although by no means the greatest, was the fact that no one had the time to collect statistics). One can surmise that births as well as deaths differed between the 1940s and 1950s; certainly during the occupation and the revolution marriages were delayed, and this, as well as separation of married couples, would have brought the birth rate down.

Why Didn't Colonial Indonesia have a Competitive Cotton Textile Industry?

This paper quantifies the consumption and production of cotton textiles at different stages of processing in Indonesia during the Dutch colonial era (1820–1941). It discusses the main factors that impeded the development of an internationally competitive cotton textile industry, and concludes that production in the industry increased significantly in Java during 1820–71, and again during 1874–1914 and 1934–41. However, most activity involved finishing of imported cotton cloth to suit local preferences. Spinning and weaving increased only marginally, as domestic production was precluded by the high-labour intensity of small-scale production, marginal local raw cotton production, and competitive international markets for yarn and cloth. Unfavourable and fluctuating real exchange rates discouraged investment in modern spinning and weaving ventures until trade protection and technological change in small-scale weaving caused rapid growth of domestic production after 1934.

The Limits of Ethnic Clientelism in Indonesia

This paper compares the degree to which farm agriculture surpluses in pre–World War II Java and Japan were mobilised for non-agricultural investment through taxation, landlordism and private savings. It also compares government efforts in both countries to spur productivity and farm income in rice agriculture through improvements in irrigation structures and the development and dissemination of seedfertiliser technology. The pressure of the land tax, the spread of tenant farming, and the degree to which rural savings were deposited were significantly lower in Java than in Japan. Pre-war conditions in rice agriculture were less conducive in Java than they were in Japan to the development and dissemination of seed-fertiliser technology, which could spur farm productivity and contribute to surplus mobilisation.This paper compares the degree to which farm agriculture surpluses in pre-World War II Java and Japan were mobilised for non-agricultural investment through taxation, landlordism and private savings. It also compares government efforts in both countries to spur productivity and farm income in rice agriculture through improvements in irrigation structures and the development and dissemination of seedfertiliser technology. The pressure of the land tax, the spread of tenant farming, and the degree to which rural savings were deposited were significantly lower in Java than in Japan. Pre-war conditions in rice agriculture were less conducive in Java than they were in Japan to the development and dissemination of seed-fertiliser technology, which could spur farm productivity and contribute to surplus mobilisation.