INDONESIA’S RESOURCES BOOM IN INTERNATIONAL PERSPECTIVE: POLICY DILEMMAS AND OPTIONS FOR CONTINUED STRONG GROWTH

Abstract

In the decade to 2011, developments in the Chinese economy gave the world its biggest ever resources boom and set the scene for a resources deflation. The boom generated high incomes and investment in global resources, especially coal. It boosted Indonesian growth and diverted the policy focus from the productivity-raising reforms that are necessary for broad-based growth. Arbitrary interventions reduced the gains from the boom, especially in commodities other than coal, but also diminished the size of the boom and therefore the economic adjustment challenge that faces Indonesia now. Indonesia handled the Dutch disease and related challenges better than some countries and worse than others. ..