Working Paper: CEPR ID: DP2932
Authors: Jonathan Temple
Abstract: This paper analyses the remarkable growth experience of Indonesia since 1966. Over a thirty-year period, GDP per capita rose more than fourfold, despite unfavourable initial conditions, some weak institutions, and flawed microeconomic policies. The paper attributes this strong performance to a mutually reinforcing combination of political stability, competent macroeconomic policy, and some important instances of good fortune. It explores the origins of good policy and analyses three of the main external shocks. The paper also argues that rapid growth interacted with weak institutions in a way that contributed to the severity of the crisis of 1997-98.
Keywords: growth; Indonesia; structural change
JEL Codes: O11; O53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political stability (P26) | economic growth (O49) |
| macroeconomic policy (E60) | economic growth (O49) |
| political stability + macroeconomic policy (E60) | economic growth (O49) |
| economic growth (O49) | institutional weaknesses (O17) |
| institutional weaknesses (O17) | crisis (H12) |
| economic growth + institutional weaknesses (O17) | crisis (H12) |