Growth Collapses in Indonesia: A Comparison of the 1930s and the 1990s

Abstract

Thanks largely to the work of Pierre van der Eng we now have quite a good picture of trends in growth of Indonesia's real Gross Domestic Product (GDP) over the twentieth century. There were two periods, each of around three decades when growth was positive in per capita terms. From 1900 to 1930, real GDP grew at 2.7 per cent per annum; if we assume that population grew over this period at around 1.2 per cent per annum, then annual growth in real per capita terms was 1.5 per cent per annum. This implies an increase over a thirty-year period in per capita GDP of around fifty-six per cent. Beginning in 1929, there was a sustained growth collapse which continued through the early 1930s; real per capita GDP in 1934 was only eighty-three per cent of the 1928 level in 1934 (Table 1). Some recovery occurred in the latter part of the 1930s, and by 1941 per capita GDP had returned to roughly the 1928 level. But the twenty-five years from 1941 to 1966 were characterised by foreign occupation, revolutionary struggle, and, after 1949, considerable macroeconomic instability culminating in hyper-inflation in the early and mid-1960s. In 1967, per capita GDP was estimated by Van der Eng to be only about seventy-five per cent of the 1928 figure.