ABSTRACT
In the three decades after the publication of Gunnar Myrdal’s Asian Drama (1968), Indonesia was one of the fastest-growing economies in the world, which was able to narrow to gap with the rest of the world economy substantially (Chapter 2). By all standards, growth was remarkably rapid: its GDP per capita increased more than that of its neighbours (Figure 2.7); growth was also much faster than its ‘market access’ (its weighted export markets), pointing to strong improvements in its international competitiveness (Figure 2.8); and the quality of institutions, as measured via the functioning of rice markets, also improved dramatically (Figure 2.11 and 2.12). In the 30 years between 1967 and 1997, GDP and GDP per capita grew, on average, 6.8 and 4.6 per cent per year, respectively. In 1972 GDP per capita at last exceeded the peak reached in 1941, and by 1997 it was almost three times that of 1941 (Van der Eng 2002: 144; 2010: 304–306). This was not only due to more labour and capital – to ‘perspiration’ – but also to productivity growth as another important source of income growth (Figure 2.5).
