Two hundred years of economic
growth in Indonesia, 1800-2012
1830-1960 uitgelicht
Daan Marks and Jan Luiten van Zanden
Utr...
Introduction
• Big question of economics/economic history
• Why are some countries so rich and others
poor?
• We offer cou...
This study
• Two reconstructions of GDP and its components
– Java, 1815-1940 (see Van Zanden 2002)
– Indonesia, 1880-2007 ...
5
GDP per capita in the Netherlands, Indonesia and Engeland 1820-2008
(dollars 1990)
100
1000
10000
100000
1820 1870 1920 ...
Divergence and catching up
• In 1820 already large gap: GDP per capita Java 500-
550 dollar; Netherlands/England: c. 2000 ...
Other measures of living standard:
Heights: slow or no progress
7
152.0
154.0
156.0
158.0
160.0
162.0
164.0
166.0
168.0
18...
Phases of development
9
GDP per capita Java/Indonesia 1820-2008 (dollars 1990)
100
1000
10000
1820 1830 1840 1850 1860 187...
Regime changes
• 1830: introduction Cultivation System
• 1860s: introduction liberal policies
• 1890s: Ethical Policy
• 19...
Analysis book
• Why regime changes?
• Why switch from Cultivation System to Liberal
Policies? Why Ethical Policy?
• Why fa...
How did Indonesia compare with rest
of the world?
13
GDP per capita, Indonesia/Java compared with the world (1880=100)
0
2...
Falling behind its Neighbors
Cultivation System 1830-1870
• Introduced 1830, Joh. Van den Bosch
• Forced cultivation of cash crops (sugar, coffee)
• Pa...
Cultivation system 1830-1870
• Successful in generating more exports
• But at expense of efficiency (planned
economy) and ...
17
Gradual transition to more liberal
policies
• Not government but private entreprise central actor
in economic modernizatio...
Table 5.2 Exports of Indonesia, 1874-1914 (in million guilders)
1874 1880 1890 1900 1910 1914
Sugar 50 49 52 74 140 183
Co...
No industrialization but
de-industrialization
20
21
Figure 5.2 The structure of Javanese GDP, 1815-1939
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1
1815 1825 1835 1845 1855 18...
Proceeds growth distributed
unequally
1880 1925
Number
(000)
Average
Income (fl)
Share
Income Gini Number
Average
Income (...
Real wages coolies Java 1825-1940
23
Debate at about 1900
• ‘Declining welfare’ of Indonesian
population/peasantry
• Growing criticism in NL
• 1901: Ethical Po...
25
Limitations ‘developmental’ project
• Start form very low beginnings (for example literacy 1920:
6,5% men, 0,5% women)
• ‘...
27
Income and Expenditure of Colonial Government, 1900-1940
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1900 190...
From Dutch perspective
• Indonesia increasingly important: 40% of FDI
and 8% of GNI (in 1938)
• Large corporations such as...
Difficult independence
• Too much at stake for Dutch elite (‘rang van
Denemarken’)
• Problems of two nations after war &
o...
Ontvlechting 1950s
• After 1949: continued dominance of strategic sectors of
Indonesian economy
• Increasingly ‘nationalis...
Phases of development
31
GDP per capita Java/Indonesia 1820-2008 (dollars 1990)
100
1000
10000
1820 1830 1840 1850 1860 18...
Conclusions
• 1830-1940: steeds verder vervlechting
• 1830-1870: directe handel en exploitatie
• 1870-1940: investeringen ...
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Twee vervlochten economieen – indonesie en nederland 1830 1960

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Nederland en Indonesië raakten tussen 1830 en 1930 steeds nauwer met elkaar vervlochten, maar de voordelen hiervan waren zeer ongelijk verdeeld. In deze lezing wordt eerst deze groeiende vervlechting in kaart gebracht – van het Cultuurstelsel tot en met de Depressie van de jaren Dertig. Hoe pakte de koloniale relatie economisch uit in de verschillende perioden, en hoe waren politieke macht en economische welvaren (of het ontbreken daarvan) met elkaar verbonden? Daarna wordt ingegaan op de dramatisch verlopen ‘ontvlechting’ na 1945 – in welke mate profiteerde Indonesië van de beëindiging van de koloniale relatie en plukte men de vruchten van de onafhankelijkheid? En hoe verging het Nederland?

Prof.dr. Jan Luiten van Zanden is hoogleraar Global Economic History aan de Universiteit Utrecht, honorair hoogleraar Angus Maddison aan de Rijksuniversiteit Groningen en honorair hoogleraar aan de Universiteit van Stellenbosch. Hij werd bekroond met de Spinozapremie van NWO (2003) en de prijs Akademiehoogleraar door de KNAW (2011). Hij is ere-voorzitter van de International Economic History Association en was de belangrijkste organisator van de vijftiende World History Congress Economische in Utrecht in 2009. Zijn publicaties omvatten Economic History of Indonesia 1800-2010. Between Asian Drama and Growth Miracle. With Daan Marks, London: Routhledge, 2012 (a translation in Bahasa Indonesia has also been published in 2012); The Long Road to the Industrial Revolution. The European Economy in a Global Perspective, 1000-1800. Leiden: Brill Publishers, 2009; Nederland en het Poldermodel. Sociaal-economische Geschiedenis van Nederland, 1000-2000. With Maarten Prak. Amsterdam: Bert Bakker, 2013.

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Twee vervlochten economieen – indonesie en nederland 1830 1960

  1. 1. Two hundred years of economic growth in Indonesia, 1800-2012 1830-1960 uitgelicht Daan Marks and Jan Luiten van Zanden Utrecht University
  2. 2. Introduction • Big question of economics/economic history • Why are some countries so rich and others poor? • We offer country study: Indonesia • Basis: (very rich) archival sources Dutch period, and literature post-Independence period 3
  3. 3. This study • Two reconstructions of GDP and its components – Java, 1815-1940 (see Van Zanden 2002) – Indonesia, 1880-2007 (see Van der Eng 2008, and also Marks 2009) • Additional data on wages, heights, education, income inequality and rice prices • Together they offer the unique opportunity to analyse the determinants of long-run growth for a developing country over a period of almost two centuries. 4
  4. 4. 5 GDP per capita in the Netherlands, Indonesia and Engeland 1820-2008 (dollars 1990) 100 1000 10000 100000 1820 1870 1920 1970 Indonesia Netherlands Java Engeland/UK
  5. 5. Divergence and catching up • In 1820 already large gap: GDP per capita Java 500- 550 dollar; Netherlands/England: c. 2000 dollar 1990 (1 : 4) • Increased gap: 1900: Java 670 versus, Neth/England: 4000 (1 : 6) • 1970: Indonesia 1200 dollar versus Neth./England: 12000 (1 : 10) • Catching up since 1970: 2008: Indonesia 4200 versus Neth./England 24000 (1:7) • Indonesia: * 8 increase GDP per capita; Netherlands * 12 increase GDP per capita 6
  6. 6. Other measures of living standard: Heights: slow or no progress 7 152.0 154.0 156.0 158.0 160.0 162.0 164.0 166.0 168.0 1890 1910 1930 1950 1970 1990 Java vs Outer Islands Java & Madura Outer Provinces Baten et al. (2009)
  7. 7. Phases of development 9 GDP per capita Java/Indonesia 1820-2008 (dollars 1990) 100 1000 10000 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Liberal policies Cultivation System Ethical Policy Depression 1930s Japanese Occupation Sukarno Suharto's New Order Financial Crisis 1998
  8. 8. Regime changes • 1830: introduction Cultivation System • 1860s: introduction liberal policies • 1890s: Ethical Policy • 1920s: return to conservative colonial policy • 1950s: experiments with democracy • 1968-1972: transition to New Order • 1998: democratic reforms
  9. 9. Analysis book • Why regime changes? • Why switch from Cultivation System to Liberal Policies? Why Ethical Policy? • Why failure of democracy under Sukarno? • Why Asian crisis resulting in change towards democracy? • Interactions between economics and politics
  10. 10. How did Indonesia compare with rest of the world? 13 GDP per capita, Indonesia/Java compared with the world (1880=100) 0 20 40 60 80 100 120 140 160 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Indonesia/world Java/world
  11. 11. Falling behind its Neighbors
  12. 12. Cultivation System 1830-1870 • Introduced 1830, Joh. Van den Bosch • Forced cultivation of cash crops (sugar, coffee) • Payment of plantloon • To pay for land rent • Also coerced labour in transport • Building on indigenous traditions: coffee Priangan • Cooperation with local elites 15
  13. 13. Cultivation system 1830-1870 • Successful in generating more exports • But at expense of efficiency (planned economy) and consumption • Almost no growth 1830-1870 • Large income transfers (batig slot) to Netherlands • Some industries profit a lot, and the state • Reforms 1840s onwards towards more liberal economy 16
  14. 14. 17
  15. 15. Gradual transition to more liberal policies • Not government but private entreprise central actor in economic modernization • Plantations on Java (tea), and ‘Outer islands’ (tobacco Deli) • Consolidation territorial control (‘modern imperialism’) • Relative decline of trade between NL and Ind • Instead: capital and skilled labour • Modernization transport (railways, shipping) • ‘Closer’ to NL: Suez-canal 1869 18
  16. 16. Table 5.2 Exports of Indonesia, 1874-1914 (in million guilders) 1874 1880 1890 1900 1910 1914 Sugar 50 49 52 74 140 183 Coffee 68 60 37 29 12 23 Tea 3 2 2 4 12 27 Spices 6 5 7 9 14 14 Tobacco 11 15 31 74 32 64 Copra 0 0 2 10 42 61 Tin & Tin ore 5 10 9 30 34 41 Petroleum 0 0 0 5 38 137 Rubber 0 0 0 0 7 27 Java and Madura 144 136 126 184 286 360 Outer Islands 25 43 51 75 166 324 Total 169 179 177 259 453 685 19
  17. 17. No industrialization but de-industrialization 20
  18. 18. 21 Figure 5.2 The structure of Javanese GDP, 1815-1939 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1 1815 1825 1835 1845 1855 1865 1875 1885 1895 1905 1915 1925 1935 share in GDP smallholders agric. export agriculture rest primary sector textiles other industry trade transport other services government
  19. 19. Proceeds growth distributed unequally 1880 1925 Number (000) Average Income (fl) Share Income Gini Number Average Income (fl) Share Income Gini Indonesians 3939 146 0,88 0,32 7114 201 0,72 0,32 Foreign Asiatics 57 629 0,05 0,64 129 1179 0,08 0,54 Europeans 9 4598 0,06 0,61 63 6150 0,20 0,53 Total 4006 163 1 0,39 7306 270 1 0,48 22
  20. 20. Real wages coolies Java 1825-1940 23
  21. 21. Debate at about 1900 • ‘Declining welfare’ of Indonesian population/peasantry • Growing criticism in NL • 1901: Ethical Policy: aim colonial project is to raise living standard of population • Welfare services: education, health, agricultural services, credit & saving • Changes in taxation system: tax farming via Chinese - direct taxation; reform opium tax • Volksraad 1918: limited self-governance 24
  22. 22. 25
  23. 23. Limitations ‘developmental’ project • Start form very low beginnings (for example literacy 1920: 6,5% men, 0,5% women) • ‘western innovations’ did not work in different context (Raifeissen-cooperatives) • Budget deficits 1917-1923, followed by turn to the ‘right’ in 1920s • Volksraad did not get real power • No accommodation of nationalistic movement • Bad monetary policies in 1930s (gold standard) • But de-globalization/protectionism led to modest industrial growth 26
  24. 24. 27 Income and Expenditure of Colonial Government, 1900-1940 0 200.000 400.000 600.000 800.000 1.000.000 1.200.000 1900 1902 1904 1906 1908 1910 1912 1914 1916 1918 1920 1922 1924 1926 1928 1930 1932 1934 1936 1938 1940 Expenditure Income
  25. 25. From Dutch perspective • Indonesia increasingly important: 40% of FDI and 8% of GNI (in 1938) • Large corporations such as Royal Dutch Shell or NHM dependent on colony; • Close networks of colonial/commercial/political elites: Colijn as an example • Inequality: Dutch interests protected in Indonesia, but not vice versa 28
  26. 26. Difficult independence • Too much at stake for Dutch elite (‘rang van Denemarken’) • Problems of two nations after war & occupation; for example: the Dutch needed foreign exchange from Indonesia (oil, rubber) • No recognition of Independence movement as offering viable alternative • After 1949: continued dominance of strategic sectors of Indonesian economy 29
  27. 27. Ontvlechting 1950s • After 1949: continued dominance of strategic sectors of Indonesian economy • Increasingly ‘nationalistic’ policies to further Indonesianisasi (Benteng program) • Leads to tension between Java and other regions in 1950s • Transition of ‘guided democracy’ in 1958 • Consolidation of power Sukarno • Conflict about Irian Jaya results in nationalization of Dutch assets and emigration of remaining Dutch citizens (1958/59) 30
  28. 28. Phases of development 31 GDP per capita Java/Indonesia 1820-2008 (dollars 1990) 100 1000 10000 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Liberal policies Cultivation System Ethical Policy Depression 1930s Japanese Occupation Sukarno Suharto's New Order Financial Crisis 1998
  29. 29. Conclusions • 1830-1940: steeds verder vervlechting • 1830-1870: directe handel en exploitatie • 1870-1940: investeringen in Indonesie en menselijk kapitaal (administratie en ondernemerschap) • Na 1942: Ontvlechting door oorlog en conservatieve reflex NL • NL had er onverwacht weinig problemen mee • Ind wist na 1967 succesvolle weg modernisering in te slaan

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