Indosesia-project - Indonesia Indonesia is located in...

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Indonesia Indonesia is located in Southeast Asia and is the world’s largest archipelago state. It is divided into thirty-three provinces, each having its own governor. Indonesia was once ruled by Japan, but gained its independence after World War II. Since establishing independence, Indonesia has grown to be the third largest democracy (CIA). Indonesia is active in the global market and is a founder of the Association of Southeast Asian Nations, which aims to achieve economic growth, strength, and peace among nations. It is also a member of the United Nations, the World Trade Organization, and the ASEAN free trade agreement. Although Indonesia is still an emerging country, it continues to pursue globalization. Long Run Economic Growth Since Indonesia established its independence after World War II, the economy has grown substantially. Growth was extraordinary in the 1960s due to Indonesia’s natural resources. Exporting raw materials, like timber and oil, became a huge growth engine for the country. Since Indonesia is surrounded by water, transporting goods by boat was simple and lead to a rapid importing and exporting business. Agriculture was also a growing sector. By the early 1980s, growth began to plateau. Employment was still rising and production was strong. However, by the late 1980s, employment began to drop in agriculture (Asar 3). In recent years, the main engine of growth has been capital, followed by labor then total factor productivity. Indonesia relies heavily on equipment to produce outputs. Indonesia is beginning to invest more in research and development and soon total factor productivity will probably become a huge growth sector. Currently, “Indonesia has been viewed as one of Southeast Asia's successful highly performing and newly industrializing economies, following the trail of the Asian tigers” (Touwen). Although it has grown greatly, Indonesia still struggles with issues, such as poverty and inequality. Currently, the population living below the poverty line is 17.8% (CIA). In the early 1990s, the President brought the issue of poverty to attention. In doing so, poverty became a public concern that was frequently discussed (Asra 2). Since the 1970s, poverty has been dropping in both urban and rural areas. Abuzar Asar states that the drop in rural poverty is due to the “development in the agricultural sector, financed in part by oil revenue…” (5). These developments have lead to increased productivity and therefore an increase in revenues. Another problem we see in Indonesia is inequality. The government recognized the issue at hand and attempted to make the income distribution more equal in 1978. Equality was placed as Indonesia’s number one priority (Asar 3). Inequality was very bad in the 1970s, but began to improve in the 1980s. Unfortunately, in the 1990s, inequality began to grow in regard to consumption. The Asian economic crisis in the late 1990s definitely increased both poverty and inequality. Many jobs were lost and exports dropped drastically. Indonesia has been improving its infrastructure over the years and is currently working
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Indosesia-project - Indonesia Indonesia is located in...

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