INDONESIA’S RESOURCES BOOM IN INTERNATIONAL PERSPECTIVE:

POLICY DILEMMAS AND OPTIONS FOR SUSTAINED, EQUITABLE GROWTH

INDONESIA’S RESOURCES BOOM IN INTERNATIONAL PERSPECTIVE: POLICY DILEMMAS AND OPTIONS FOR SUSTAINED, EQUITABLE GROWTH

In Indonesia, the twenty first century resources boom saw a partial reversion to specialization in resource-intensive commodities.  The boom was underpinned by the unusual rate and structure of Chinese growth in the early twenty first century which support record high global prices for energy and industrial raw materials. The increase in value of Indonesian resource exports 2003-11 allowed incomes to grow reasonably strongly in the immediate aftermath of the global financial crisis, alongside a decline in competitiveness of trade-exposed industries outside resources. Those opportunities ended with China’s adoption of a new model of development after 2011.

The end of the boom has increased the importance of removing impediments to efficient resource allocation. Candidates for reform include removal or moderation of fuel subsidies, high protection against imports and labour market regulation. The concluding section of the paper discusses whether the resources boom was a curse or a blessing or some of each. It ends with suggestions on priorities for resources sector and wider reform to increase equity in economic development in Indonesia after the resources boom. The latter include managing tension between some dimensions of resources development and Indonesia’s interest in global climate stability.

About the Sadli Lecture

Since 2007, LPEM Faculty of Economics and Business University of Indonesia (FEB UI) and the ANU Indonesia Project have jointly organized the annual Sadli Lecture series to broaden understanding and stimulate debate among students, academics and policy makers of the key economic policy challenges faced by Indonesia, drawing on the experience of neighbouring countries. It is named in honour of the late Professor Mohammad Sadli who was one of Indonesia’s most influential commentators on economic affairs over the past 40 years. The annual Lecture is based on a commissioned paper on Indonesia in comparative economic perspective, published each year in the August edition of the Bulletin of Indonesian Economic Studies.