Premium
Growth and the Subsectoral Pattern of the Manufacturing Sector in Indonesia ‐ A Comparative Study of 16 Countries
Author(s) -
Fukuchi Takio
Publication year - 1994
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/j.1467-8381.1994.tb00016.x
Subject(s) - industrialisation , diversification (marketing strategy) , indonesian , comparative advantage , newly industrialized country , economics , manufacturing sector , revealed comparative advantage , industrial policy , industrial organization , business , international trade , developing country , international economics , market economy , economic growth , marketing , linguistics , philosophy
There is a widely held and optimistic view that, based upon the successful implementation of the product‐cycle theory and the technological ladder hypothesis, ASEAN countries, the so‐called Asian near NICs, will follow the Asian NICs up the ladder and take off as the second tier of NICs in the near future. To realise this ambition, each of the near NICs needs to successfully achieve two take‐offs: first, rapid quantitative expansion based upon existing comparative advantage and, second, the successful transformation of their industrial structures to create dynamic comparative advantages. The Indonesian manufacturing sector recorded an average growth rate of 12% in 1980‐90, but the accompanying structural changes were not great. The ‘rapid growth’but ‘modest structural change’of the Indonesian manufacturing sector raises the important problem of cultivating new leading sectors in the future. Usually the machinery subsector plays a big role in other ASEAN and NIES economies, but it still needs more momentum for development in Indonesia. This implies a strong need for the institutional and physical infrastructures, and supporting industries for the machinery subsector, as well as further diversification of the industrial structure. The purpose of this paper is to describe the features of industrialization in Indonesia in the 1980s, to measure the capacity of the transformation of the Indonesian manufacturing sector, and to discuss some policy issues related to furthering industrialization in the future. Section I contains some introductory remarks. In Section II, we implement the comparative analysis based upon two aggregate indicators. In Section III, we further analyse the structural changes at a more disaggregate level of 16 subsectors. In Section IV we concentrate on the machinery subsector, and analyse the growth potential and the necessary industrial policy in the medium or long run. In Section V we analyse the possible long‐run development of a specialization pattern in the Indonesia manufacturing sector. We present the summary and conclusions with some relevant policy discussions in Section VI.