Growth and Inequality: The Case of Indonesia, 1960-1997

This paper investigates whether the ‘Kuznets hypothesis’, that economic growth from low levels of GDP per capita is initially associated with an increase in income inequality and later followed by a decline in inequality, is supported by evidence for a less-developed country, Indonesia. The paper outlines the relevant features of the process of rapid growth and structural change, in particular industrialisation since the 1960s. It notes the possible consequences of this process for changes in income distribution, and draws on disparate sets of statistical data to trace trends in income inequality in Indonesia. The paper concludes that the evidence for Indonesia suggests an increase in inequality during the 1970s and a subsequent decrease of inequality until 1997. A comparison of the evidence with historical data for the UK and Japan suggests that income inequality in Indonesia was relatively low.income inequality; Kuznets hypothesis; Indonesia; economic development

Economic benefits from colonial assets : the case of the Netherlands and Indonesia 1870-1958

This paper explores the question whether and to what extent the economic relations between the Netherlands and its former colony Indonesia could be crucial to explaining `metropolitan' economic development and `peripheral' underdevelopment. It first surveys the literature on economic explanations for imperialism and the historiography involving Netherlands-Indonesia relations. The paper then generalises the broad economic importance to the Dutch economy of having Indonesia as a colony. The paper argues that the economic relevance shifted from trade to financial relations since ca.1900. Ready access to the Dutch capital market is likely to have advantaged economic development in Indonesia, albeit at the price of a shift in company ownership and a continuous transfer of dividend and interest payments to the Netherlands. The Dutch economy benefited from the relations with Indonesia, but was not particularly dependent on this relationship. This is demonstrated by the fact that after the decolonisation of Indonesia the economic ties between the two countries were severed during the 1950s. The Dutch economy entered a period of rapid growth, while the loss of ready access to the Dutch capital market contributed to economic stagnation in Indonesia.

Historical perspectives on Asian economic growth and development

The papers featured in this special issue are based on presentations made at the Harvard–Hitotsubashi–Warwick Conference on "Economic Change Around the Indian Ocean in the Very Long Run", held at the University of Warwick in Venice, Palazzo Pesaro Papafava, 22–24 July 2008. The conference was originally conceived with countries around the Indian Ocean in mind, but soon expanded to include East Asia, and this wider geographical coverage is reflected in the papers included here. The conference was organised by Stephen Broadberry (Warwick), Kyoji Fukao (Hitotsubashi), Bishnupriya Gupta (Warwick) and Jeffrey Williamson (Harvard), and generously financed by the University of Warwick, Hitotsubashi University and the Economic History Society. A central aim of the organisers was to bring together researchers seeking to break free from the constraints of both the older Eurocentric and the nationalistic anti-colonialist literatures which have dominated much of the economic history of Asian countries. There was also a desire to encourage work which is quantitative and uses economic analysis, and which can be used to shed historical light on the current economic performance of the region

From strangers to partners in the hemisphere: New Prospects in Australia’s Economic Relations with Latin America

From marginal relevance, the trade and business relations between Australia and Latin America have grown during the past two decades. A proximate reason is that they diversified to encompass a greater range of manufactures and services. Differences in the business environments of Australia and Latin America remain that are obstacles to further expansion of these relations. The ultimate reason for the growth and diversification of these relations is that Australia and its key business partners in Latin America (Argentina, Brazil, Chile and Mexico) experienced the impact of processes of trade liberalisation, market deregulation and structural reform during the past two decades. Australia and these Latin American countries now share common interests in fostering business relations, for which there are opportunities at multilateral, plurilateral and bilateral levels.Trade, Investment, Australia, Latin America, Economic Relations

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.inequality, top incomes, personal income taxation, Indonesia

The sources of long-term economic growth in Indonesia, 1880-2008

This paper presents new time series estimates of GDP, capital stock and education-adjusted employment, and uses a growth accounting approach to analyze GDP growth during 1880-2008. The growth of capital stock, employment and educational attainment explained almost all of GDP growth. During key growth periods 1900-29 and 1975-97, Total Factor Productivity (TFP) growth was on balance negative. TFP growth was substantial during some sub-periods, particularly 1933-41, 1951-61, 1967-74 and 2000-08. Each followed a major economic downturn that slowed capital stock growth and required a more efficient use of productive resources, supported by changes in economic policy that enhanced productivity and efficiency

Food Supply in Java during War and Decolonisation, 1940-1950

It is readily assumed that the average level of living in Indonesia deteriorated during the hectic period 1940-1950. Much of the evidence on economic change during this period is anecdotal. It is difficult to distil a general impression from it. Per capita food consumption is an important indicator of the average standard of living. For that reason this paper monitors the changes in food production, distribution and supply in the densely populated core island of Java in Indonesia. Food supply was adequate in Indonesia when the Japanese attack on the country started in 1941. During 1944-1948 per capita food supply was at a very low level in Java. In the years 1943-1945 the low level was caused by the restrictions imposed by the Japanese authorities on the domestic trade of food products, and by the coercive system of purchasing rice for distribution. Both created disincentives for farmers to produce a food surplus. Similar reasons explain the situation during the years 1946-1948. Moreover, the controversy between the returning colonial government and the government of the nationalist Republic of Indonesia impeded free shipments of food between the food deficient urban areas and the food producing rural areas. Food supply recovered during 1948-1950, with the economic re-integration of most of Indonesia.Food supply; Java; Indonesia; war; decolonisation

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