Industrialization in Indonesia since the 1970s

Introduction: During the period from the latter half of the 1980s until just before the Asian currency crisis in 1997, Indonesia’s economic development had drawn expectations and attention from various quarters, along with Malaysia and Thailand within the same Association of Southeast Asian Nations (ASEAN). In fact, the 1993 report by the World Bank, entitled “East Asian Miracle: Economic Growth and Public Policy,” recognized Indonesia as one of the East Asian economies with the strong economic performance, i.e. sustained economic growth (World Bank [1993]). And it was the manufacturing industry that had been the driving force behind Indonesia’s economic growth during that period. Since the 1997 outbreak of the Asian currency crisis, however, the manufacturing sector in Indonesia has been mired in a situation that rules out the kind of bright prospects it had emanated previously. The Indonesian economy is still in the developing stage, and in accordance with the history of industrial structural changes in other countries, Indonesia’s manufacturing industry can still be expected to serve as the engine of the country’s economic development. But is it really possible in an environment where economic liberalization and globalization are forging ahead? And, what sort of problems have to be dealt with to make it possible? To answer these questions, it is necessary to know the current conditions of Indonesia’s manufacturing sector, and to do that, it becomes important to think back on the history of the country’s industrialization. Thus, this paper is intended to retrace and unlock the track of Indonesia’s industrialization up until the establishment of the manufacturing sector in its present form, with the ultimate goal being to give answers to the above-mentioned questions. Subject to an analysis in this paper is the period from the installment of President Soeharto’s administration onward when industrialization of the modern industrial sector2 moved into high gear. 　　　The composition of this paper is outlined below. Section 1 first shows why it is important to examine import substitution and export orientation, both of which are used as the measures of the analysis in this paper, in tracking the history of the industrialization, and then discuss indicators of import substitution and export orientation as well as statistical data and resources needed to develop those indicators. Section 2 clarifies the status of the manufacturing industry among all industries by looking at the composition ratio of the manufacturing industry in terms of value added, imports and exports. Section 3 to 5 cover three periods between 1971 and 1995 and make an analysis of import substitution, export orientation and changes in the industrial structure for each period. Section 3 analyzes the period from 1971 through 1985, when Indonesia pursued the import substitution policy amid the oil boom. Section 4 covers the period from 1985 through 1990, when the packages of deregulatory measures were announced successively under structural adjustment policies made necessary by the fall in oil prices. Section 5 examines the period from 1990 through 1995, which saw the alternate shifts between the overheating of the economy by sharply rising investment by both domestic and foreign investors in the wake of the liberalization of investment, trade and financial services, and polices to cool down the economy. Section 6, which covers the 1995-1999 period straddling the economic crisis, is designed for an analysis of the changes in production trends before and after the economic crisis as well as the changes in the industrial structure. Section 7, after summing up the history of Indonesia’s industrialization examined in the previous sections, discusses problems found in respective sectors and attempts to present future prospects for the country’s manufacturing industry.

Slow and steady wins the race : how the garment industry leads industrialization in low-income countries

This paper investigates how the garment industry escapes this vicious cycle and argues for the validity of labor-intensive industry as a starting point for full-fledged industrialization, even though it might at first seem to be a digression from the path to an innovation-led economy. By examining original firm-level data on garment-producing firms collected in 2002 and 2008 in Bangladesh, Cambodia, Kenya and Madagascar, the following conclusions are drawn: (1) low wages, though still sufficient for poverty reduction, are the main source of competitiveness in low-income countries; (2) after the successful initiation of industrialization causes wages to begin to rise, there is still a possibility for productivity enhancement; and (3) skill bias in technological progress is not yet a major factor, implying that the garment industry is still a labor-intensive industry. In sum, labor-intensive industry should not be discounted as a part of the development strategy of low-income countries.

Did Japanese direct investment in Korea suppress indigenous industrialization in the 1930s? : evidence from country-level factory entry patterns

Foreign direct investment (FDI) can deliver both positive and negative spillovers to the local economy. Negative effects such as crowding-out or entry-barrier effects might outweigh the positive ones when the technological gap between foreign and local firms is significant. This paper examines the impact of Japanese direct investment into Korea under colonization in the 1930s on the entry of Korean-owned factories. By using the census of manufacturing factories in Korea, we exploit variations in the share of Japanese factories and their entry rates across counties within the same subsectors. We find that within a subsector, entry rates of Korean factories were higher in counties with higher presence and entry of Japanese factories. Positive correlations are also found between subsectors. The results imply that Japanese direct investment did not suppress the entry of Korean factories and that FDI could exert positive entry spillovers on indigenous firms, even at a very early stage of industrialization.

On QKD industrialization

During the 25 years of existence of the first protocol for Quantum Key Distribution, much has been said and expected of what came to be termed as Quantum Cryptography. After all this time, much progress has been done but also the reality check and analysis that naturally comes with maturity is underway. A new panorama is emerging, and the way in which the challenges imposed by market requirements are tackled will determine the fate of Quantum Cryptography. The present paper attempts to frame a reasonable view on the issues of the security and market requirements that QKD should achieve to become a marketable technology.

Implementation of the iDMU for an Aerostructure Industrialization in AIRBUS

AIRBUS Military has undertaken a project to implement the industrial Digital Mock-Up (iDMU) concept to support the industrialization process of a medium size aerostructure. Within the framework of a collaborative engineering strategy, such project is part of the efforts to deploy Digital Manufacturing as a key technology for the industrialization of aircrafts assembly lines. The project has confirmed the potential of the iDMU to improve the industrial design process in a collaborative engineering environment. This communication presents the main project objectives, the key methodological points, the main project achievements and the next additional developments to increase the scope and benefits of the iDMU concept.

A knowledge based application for industrialization design

After being designed, a product has to be manufactured, which means converting concepts and information into a real, physical object. This requires a big amount of resources and a careful planning. The product manufacturing must be designed too, and that is called Industrialization Design. An accepted methodology for this activity is starting defining simple structures and then progressively increasing the detail degree of the manufacturing solution. The impact of decisions taken at first stages of Industrialization Design is remarkable, and software tools to assist designers are required. In this paper a Knowledge Based Application prototype for the Industrialization Design is presented. The application is implemented within the environment CATIA V5/DELMIA. A case study with a simple Product from aerospace sector illustrates the prototype development.

A knowledge based application for industrialization design

After being designed, a product has to be manufactured, which means converting concepts and information into a real, physical object. This requires a big amount of resources and a careful planning. The product manufacturing must be designed too, and that is called Industrialization Design. An accepted methodology for this activity is starting defining simple structures and then progressively increasing the detail degree of the manufacturing solution. The impact of decisions taken at first stages of Industrialization Design is remarkable, and software tools to assist designers are required. In this paper a Knowledge Based Application prototype for the Industrialization Design is presented. The application is implemented within the environment CATIA V5/DELMIA. A case study with a simple Product from aerospace sector illustrates the prototype development.

Land Reform in South Africa in Light of Emerging Urbanization, Industrialization, and Globalization Trends

Black South Africans experienced centuries of mistreatment and land dispossessions, leaving their population in dire poverty and dependence. The 1994 democratization of South Africa birthed a three-fold land reform program dedicated to land restitution, land redistribution, and tenure reform. The first decade of implementation left government goals unmet. The relevance of land reform is examined given modern-day urbanization, industrialization, and globalization. This paper affirms land reform is still relevant socially and is therefore relevant politically and economically. Improvements to program implementation are suggested in the following areas: implementing agency support; rural representation; information management; land market stimulation; beneficiary support; and agrarian reform. Land reform limitations are discussed, and industrialization is briefly explored as the more likely solution to poverty issues.

Industrialization of Bosnia-Hercegovina, 1878-1918.

Bibliography: p.259-266.