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Escaping the middle income trap through Making Indonesia 4.0?
President Jokowi has asserted that the successful implementation of Making Indonesia 4.0 can push growth to 7 percent.
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The Jokowi administration appears to have a grasp on this, demonstrated by its push for the rapid development of infrastructure, bureaucratic reform and upgrading human capital, especially that of unskilled workers. (JP/Seto Wardhana)
M
uch attention has been afforded to President Joko “Jokowi” Widodo’s recent launch of Making Indonesia 4.0, an industrial strategy that chiefly emphasizes harnessing technology to boost growth in tune with the digital era.
Policymakers, analysts and media outlets have lauded the strategy as a method in which to catapult the economy out of the middle income trap (MIT), with the National Development Planning Board (Bappenas) saying Indonesia will join the high income club by 2045 with gross domestic product per capita of US$29,000.
Indeed, the MIT has been highlighted because of slowing growth, which in 2017 stood at 5.07 percent, lower than the government’s target of 5.2 percent. President Jokowi has asserted that the successful implementation of Making Indonesia 4.0 can push growth to 7 percent.
The MIT refers to the difficulty middle income countries (MICs) face when transitioning from middle to high income status, illustrated by moving from capital- and labor intensive- (intrinsic) led growth to innovation, technology- and knowledge- (extrinsic) led growth.
