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Industrial policy: The emergence and survival of state owned heavy industry in Indonesia

Sungkar, Yasmin (2000) Industrial policy: The emergence and survival of state owned heavy industry in Indonesia. PhD thesis, Murdoch University.

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Abstract

The central theme of the thesis is that industrial policy and the construction of an industrialized base through state leadership has been persistent in Indonesian political and economic history for five decades. The fall of statism in 1966, the sharp decline of oil prices in the 1980s, and the shift from import substitution to export oriented industrialization did not bring nationalist industrial policy to an end. I propose that the persistence of industrial policy and the state sector is best understood if we accept that patterns of development are not concerned merely with calculations made on the basis of economic efficiency relating to achieving national goals. Ideology and politics are also central elements in explaining the emergence and the survival of nationalist industrial policy in Indonesia. Indeed, these aspects explain the government’s perseverance in encouraging heavy industry as a necessary foundation for political as well as economic independence. Within the context of two competing paradigms: the liberal and the state-centered approaches, the thesis addresses the question of why Indonesia’s industrial development took the course it did. My argument is that in order to understand Indonesia’s industrial policy, we have to look at it as a function of timing-late industrialization, sequencing—large-scale state led heavy industry, and power—bureaucratic-authoritarian regime. It is not simply a technical choice of contending paradigms made by rational individuals on the basis of efficiency in allocating resources. The rise of economic nationalism and the political victories of economic nationalists explain the importance of industrial policy and heavy industry in early industrialization in Indonesia. State investment and nationalist industrial policy remained a dominant theme, even more effective and pervasive, during the 1980s oil-boom. High-technology, strategic industry flourished despite the decline of oil prices following by deregulation. However, it remains to be seen whether the pressures for liberal reforms imposed by the current crisis will bring significant changes to industrial policy and state sectors entrenched in Indonesia for some five decades.

Item Type: Thesis (PhD)
Notes: Note to the author: If you would like to make your thesis openly available on Murdoch University Library's Research Repository, please contact: repository@murdoch.edu.au. Thank you.
Supervisor(s): Robison, Richard
URI: http://researchrepository.murdoch.edu.au/id/eprint/51198
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