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Citation Information

Type Conference Paper - Seminar on World Economic Performance: Past, Present and Future, Long Term Performance and Prospects of Australia and Major Asian Economies, on the occasion of Angus Maddison’s
Title Accounting for Indonesia’s economic growth: Recent past and near future
Author(s)
Publication (Day/Month/Year) 2006
URL http://www.uq.edu.au/economics/cepa/docs/seminar/papers-nov2006/Van-der-Eng-Paper.pdf
Abstract
This paper revisits the discussion about the contribution of Total Factor Productivity (TFP) growth to Indonesia’s economic growth during 1971-2005. It re-estimates the contribution of TFP to economic growth during this period on the basis of new estimates of GDP, capital stock, education-adjusted employment, and factor income shares. After accounting for the growth of capital stock and education-adjusted employment, the residual TFP growth found to have been on average -0.1% per year, contributing -2% to 1971-2005 GDP growth. Capital stock growth and employment growth explained around 75% and 25%, respectively. Using the results of this estimation and assumptions about the expected growth of capital stock, labour force and education, the paper notes that Indonesia’s economy may potentially grow at a rate between 5.3 and 7.8% per year up to 2030. The growth rate will depend crucially on an increase of investment.

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