Indonesia's Industrial Transformation¹Part I

Abstract

It is now possible to obtain a fairly complete picture of Indonesian industril development, based on the 1986 Economic Census and subsequent Updates, the mcorporation of the huge oil and gas sector, and die earlier industrial data base. The picture is one of dramatic growth and transformation since the late 1960s when Indonesia was one of the least industrialised countries for its size. In this paper we examine the pattern and changing structure of industry, focusing on industry composition, regional industrialisation, ownership, scale and wages. Indonesia's industrial transformation is evident not only in rapid Output and employment growth, but also in the transition to more capital and skill-intensive industries, a narrowing in the earlier very large (almost ‘dualistic’) productivity differentials, strong productivity and wage growth, a broadening of the industrial base outside Java, and a probable reduction in concentration levels (at least by establishment).