Economy of Indonesia detailed information.
The development of a country's economy
It is based on several factors like - Human resources, Natural resources, Technological Development, and Social and political factors.
Indonesia is a country that pulled itself diligently in terms of economic growth after the Asian financial crisis of the late 20th century and is now considered Southeast Asia’s largest economy.
The country follows a 20-year-old economic development plan.
It is set from 2005-2025. It is a segmented plan which aims at improving the human capital of the country which can make Indonesia a great global competitor.
The poverty reduction rate in Indonesia was less than half in the year 2020 if compared with the poverty rate in the year 1999 but the covid-19 pandemic had made it very challenging for many citizens of the country to uphold their income status.
Data and stats
Thus, almost 26.42 million residents of the country out of 270.2 million are pushed towards below the poverty line resulting in loss of human resources.
If we observe the numbers according to the World Bank’s Human Capital Index, Indonesia’s generation is going to be just 54% more productive, therefore the country needs considerable social assistance to increase these numbers. If we see the history of Indonesia rising from the Asian financial and economic crisis of 1997 to now, one can be assured that pandemic cannot halt the economic development of Indonesia for long.
In terms of Natural Resources.
The country is one of the main exporters of crude petroleum and natural gas and is the largest exporter of coal and refined tin.
It also has a large variety of mineral deposits, therefore mining and extraction of oils and natural gas contribute largely to maintaining its GDP.
Along with these resources, it is also the world’s significant supplier of rubber, palm oil, coffee, and cocoa. The contribution to foreign exchange is also possible because of the mining and extraction of these various commodities and goods as they help in taxation.
Resource Analysis
Fossil fuels like natural gas, petroleum, and coal contribute bulkily to the electrical power supply of Indonesia. Even many of the power plants are run by coal and others are hydroelectric or use geothermal resources.
Technological development can bring a real change in the economy of a particular place. It can increase work production by making it more efficient, effective, and accurate.
Indonesia not only achieves large-scale poverty decline and foreign exchange through taxation but also found great success in the field of technological development.
The contribution of technology
It can be seen largely in the industrial sector and in the case of Indonesia, industrial technology contributed greatly to the growth of its first stage of industrial development.
A sudden surge in manufactured goods in ten years made Indonesia a second-tier newly-industrializing economy (NIE) in the World Bank ‘Miracle’ study.
But these technological developments are not limited to just the industrial sector, its results can be seen in diminishing poverty, unemployment, and in the acceleration of economical growth.
The other significant area
It is affected significantly by technology is transportation and telecommunications.
As Indonesia is an archipelago nation, sea transportation is a necessity for the import and export of various goods and commodities, and technology had made it possible to conduct these movements in less time and more precisely.
But there are several cities where the facility of transportation is not available and this has greatly hindered economic development.
The rise in telecommunications had a positive effect on the economy as it had made the hostile regions of the country more reachable which had indirectly affected the employment rate which affects poverty.
Social and Political Factors
It play a very key role in economical development. The Asian financial crisis which disrupted the economy of not only Indonesia but of several other countries is the prime example of how social conditions play a significant role.
Similarly, due to the pandemic, the economy of Indonesia has been impacted negatively and 2020 may be the first year where they faced a reduction in their GDP growth.
Except for the pandemic, other political issues- like trade tensions between China and the US and devaluation of their currency Rupiah play a key role in the significant decrease in Indonesia's economy.
Conclusion
The economy of Indonesia has been increasing constantly for decades and the year 2020 is the very first time when it had to face a large decrease of almost 2% in its GDP growth.
But according to IMF's 2020 forecast, the country will be able to achieve the same GDP in 2021 and to make this a reality three programs have been launched by the Indonesian government.
RPJMN, PNPM Urban, and PAMSIMAS, which ensures medical facility and education to the citizens who reside in the low strata of society.
At present, Indonesia is trying to cope with post- pandemic trauma and we may be able to see an increase in economic development soon.