Economic Growth and Sustainable Development in Indonesia

Economic Growth and Sustainable Development in Indonesia

Findings of the article
• Indonesia is listed under one of the growing low-middle income nations owing to having steady growth in GDP
per capita from 1990 to 2014.
• Meanwhile, exploitation renewable and non-renewable resources raises question on the sustainability of the
economic development.
• Human capital in terms of education, health and utility service has received marginal benefit during the
overwhelming economic performance of Indonesia.
• Sustainable development depends on the advancement of socio-political factors and perfect amalgamation of
natural and produced capital.
• Indonesia has been experiencing fluctuating and unproductive economic growth because of mismanagement
over its abundant natural resources.

Conclusions and policy implications of the article
• In the light of inclusive wealth theory, appropriate evaluation of the Indonesian biodiversity can lead the
economy towards the sustainable development.
• According to the findings, overwhelming population growth has out passed the average wealth growth
of Indonesia over the last two decades (Kurniawan and Managi 2018).
• Looking forward, irresponsible consumption of non-renewable resources aggravates the welfare of
future generation.
• The government should allocate the net-takings on productive asset instead of fund consumption plan.
• A royalty policy needs to be allowed to recover the proportionate rent from the use of natural resources
(Barr et al. 2016).
• Production of natural capital must be encouraged to generate positive externalities for the economy.

Weakness of the article and how to improve
• From the author’s perspective, the negative average growth of inclusive wealth is related to over
exploitation of natural resources. However, the optimum consumption point of natural resources has not
been identified in this article.
• Identification of optimum usage level is necessary to achieve the sustainable goal.
• Considering the UNEP report of 2014, both human capital and manufactured capital have been reported
to grow even after fall in natural resources. This result contradicts the Hartwick-Solow’s weak
sustainability concept.
• Investment in renewable energy is directly related to the infrastructure development, mentioned in the
article. However, this is always not applicable for archipelagic countries, like Indonesia.
• The benefit of development needs to be realized by every section of the society.

How is article overall to read?
• From the article, it can be deduced that depletion of natural resources has significant contribution to the
non-sustainable economic growth of Indonesia (Shahbaz et al. 2014).
• Existing energy efficiency policy of Indonesia is not technologically improved as per the market demand.
• The article highlights the importance of economic liberalization policy emphasizing on the technological
catch-up strategy (Setiawan et al. 2018).
• The article evaluates the idea of rising energy price policy to support the energy saving program.
• The relationship between deforestation pressure and increasing poverty has been highlighted in this article.

Reference list
1. Kurniawan, R. and Managi, S., 2018. Economic growth and sustainable development in Indonesia: an
assessment. Bulletin of Indonesian Economic Studies, 54(3), pp.339-361.
2. Setiawan, M.I., Dhaniarti, I., Utomo, W.M., Sukoco, A., Mudjanarko, S.W., Hasyim, C., Prasetijo, J., Kurniasih, N.,
Wajdi, M.B.N., Purworusmiardi, T. and Suyono, J., 2018, April. The Correlations between Sustainability and
Indonesian Economic Growth. In IOP Conference Series: Earth and Environmental Science (Vol. 140, No. 1, p.
012089). IOP Publishing.
3. Barr, C.M., Resosudarmo, I.A.P., Dermawan, A., McCarthy, J., Moeliono, M. and Setiono, B. eds.,
2016. Decentralization of forest administration in Indonesia: Implications for forest sustainability, economic
development, and community livelihoods. CIFOR.
4. Shahbaz, M., Hye, Q.M.A., Tiwari, A.K. and Leitão, N.C., 2014. Economic growth, energy consumption, financial
development, international trade and CO2 emissions in Indonesia. Renewable and Sustainable Energy Reviews, 25,
pp.109-121.