Economic Growth and Decolonisation in Indonesia

Abstract

The economist Hal Hill begins his authoritative survey of the Indonesian economy under Soeharto's “New Order” (Orde Baru) government with quotes from leading development economists, who are singularly pessimistic about the prospects for economic growth in Indonesia. A negative assessment such as that given by Swedish Nobel Prize Laureate Gunnar Myrdal is understandable as he was writing at the time of the severe economic crisis accompanying the eclipse of Sukarno's “Old Order” (Orde Lama) in the mid-1960s. More surprising is the verdict of Benjamin Higgins, known to have coined the expression “chronic dropout” for Indonesia. Higgins had spent quite a bit of time in Indonesia in the early 1950s as an advisor from the World Bank. Was his harsh verdict, akin to the oft-heard epithet “perpetual underachiever”, based on his own personal observations in the newly independent nation, or was his judgement also coloured by the near-collapse of the economy in the mid-1960s? The received dismal view of Indonesia's economic performance under Sukarno forms the logical point of departure for this article.