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Jakarta Post

Innovate or stagnate: The road to Indonesia 4.0

  • Erry Wahyu Prasetyo

Geneva   /   Wed, February 27 2019   /  01:47 am

In an official report released on Feb. 6, Statistics Indonesia (BPS) revealed that Indonesia’s gross domestic product (GDP) per capita for 2018 reached a record US$3,927. This means that Indonesia has officially graduated from the lower-middle income classification, breaking the $3,896 threshold set by the World Bank for a country to be classified as an upper-middle income country. This is a cause to celebrate, but that does not mean that the road ahead will be easier for Indonesia. To join the high-income club, Indonesia has to break through $12,055 GDP per capita. That means an average of 5 percent economic growth has to be maintained until 2045. Otherwise, it will join many developing countries in the middle-income trap, where it can no longer compete internationally both in labor-intensive low-value added activities (because wages are too high) as well as in knowledge-intensive hig...