抄録
The purpose of this paper is to analyze qualitatively the growth mechanism of the Indonesian economy through a simple growth model, then to evaluate quantitatively from empirical data the major factors which promote economic development.
GDP growth rate in Indonesia has been accelerating since 1960, mainly due to the rapid expansion of manufacturing industries as well as the steady progress of agriculture. If a high rate of capital accumulation is maintained, manufacturing industries will expand, and hence a high rate of economic growth will be expected. There is no critical supply-side constraint on the promotion of capital accumulation, because exports of oil and agricultural crops are sufficient to finance increasing imports of capital goods. Therefore, whether manufacturing industries continue to grow or not depends primarily on the demand side. If increased sales of manufactured goods on the domestic market are expected, entrepreneurs will try to expand their production. In other words, one of the most important factors for economic development of Indonesia is to increase people's purchasing power of manufactured goods. For this purpose, it is indispensable to create sufficient employment opportunities through the launching of laborintensive export industries.
