Indonesia’s Growth: 1967-1981

by Dustin Dobbels
Economics
Faculty advisor: Dr. Jeremy Horpedahl

Indonesia has had steady economic growth for most of the latter part of the 20th century. From 1967-1981 Indonesia’s GDP growth averaged nearly 8%. This caused average incomes to more than double. There have been numerous factors that have attributed positive and negative impacts on the nation: political, economic, environmental and social. This presentation attempts to discover the effects of Indonesia’s policies as well as non-policy related factors on the growth rate, measured in international dollars as of 1990 of GDP per capita, of the country. I propose that positive macroeconomic policies (such as free trade policies, a united and focused population, and an investment in human capital), the abundance of land and natural resources, and rising oil prices helped drive Indonesian growth despite shortcomings dealing with corruption, weak legal and banking systems, and too much government presence.