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Immiserizing GrowthWhen Growth Fails the Poor$
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Paul Shaffer, Ravi Kanbur, and Richard Sandbrook

Print publication date: 2019

Print ISBN-13: 9780198832317

Published to Oxford Scholarship Online: March 2019

DOI: 10.1093/oso/9780198832317.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 18 January 2022

Is Structural Transformation-led Economic Growth Immiserizing or Inclusive? The Case of Indonesia

Is Structural Transformation-led Economic Growth Immiserizing or Inclusive? The Case of Indonesia

Chapter:
(p.226) 10 Is Structural Transformation-led Economic Growth Immiserizing or Inclusive? The Case of Indonesia
Source:
Immiserizing Growth
Author(s):

Kyunghoon Kim

Andy Sumner

Arief Anshory Yusuf

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198832317.003.0010

This chapter discusses the relationship between the recent pattern of structural transformation in the Indonesian economy and poverty reduction. In the past two decades, Indonesia has become a service-centred economy while its manufacturing sector has ceased to act as the driver of structural transformation. Further, the manufacturing sector’s capacity to generate employment and to lead productivity growth has deteriorated compared to that during the two decades prior to the Asian financial crisis. Since the late 1990s, Indonesia has also experienced a slowdown in poverty reduction and a rapid increase in inequality. This chapter argues that Indonesia’s economic growth will struggle to be as dynamic as that during the high-growth period if the service sector in its current form continues to lead structural transformation. This is because Indonesia’s service subsectors with large employment absorptive capacity have low productivity compared to the industrial subsectors. Without recovering dynamism in structural transformation, Indonesia’s fight against poverty and inequality is expected to be difficult.

Keywords:   Indonesia, structural transformation, productivity, industrialization, deindustrialization, inequality, poverty

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