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

Abstract

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.