A new developmentalism in Indonesia?

Over the course of the past decade, Indonesia's economic planning has become increasingly developmentalist in orientation. While aspects of this model have deep roots in the country's history, a more self-conscious developmentalist agenda re-emerged during President Susilo Bambang Yudhoyono's second term in office (2009-14). This paper suggests that under President Joko Widodo a new developmentalism has crystallized further and, arguably, become a defining feature of Indonesia’s political economy. To advance this argument, the paper draws upon studies of the "new developmentalism" in middle-income and emerging economies. This new developmentalism is characterized by a normative commitment to an activist state that can engineer fast economic growth, direct industrial upgrading, and ensure economic redistribution. However, developmental agendas should be distinguished from developmental outcomes. For Indonesia, state-led programmes for industrialization and inclusive economic growth have often fallen short. This study highlights some structural constraints upon the new developmentalism, with a particular focus upon politics. Specifically, it identifies patronage and clientelism as fundamental challenges to an effective state-led developmental model. Successive Indonesian governments, Jokowi's included, have taken a conservative approach to the political problems that undermine their developmental goals. (J SEA Econ/GIGA)