ABSTRACT
This chapter analyzes the political economy of Indonesia’s industrial policies from a historical perspective. By tracing essential parts of the country’s industrial policies, it illuminates that the evolution of state-business relations was steered by cronyism and patrimonialism. Indonesia’s mode of capitalism and its institutional changes follow a distinct track that is in line with the notion of path dependency. Despite a transformation from an authoritarian rule to democratization in 1998, old business interests managed to survive, and the country’s institutional framework continues to persist (Aspinall, 2013: 239–240). Owing to the historical continuity of Indonesia’s industrial policies, the country’s class of autochthonous capitalists continues to be dependent on preferential treatment by the state and technological assistance by multinational corporations. The chapter’s first part presents economic key figures and illuminates the country’s legacy of ethnic segregation. Subsequently, the chapter depicts Indonesia’s industrial policy strategies in seven phases since 1945. The chapter finally evaluates Indonesia’s political economy of industrial policy and refers to the historical continuity of state-business relations.
