How Not to Industrialise? Indonesia's Automotive Industry

Haryo Aswicahyono
Authors registered in the RePEc Author Service: Muhamad Chatib Basri

Bulletin of Indonesian Economic Studies, 2000, vol. 36, issue 1, 209-241

Abstract: This paper examines the development of the Indonesian automotive industry since 1970. After giving an overview of trends and a comparative East Asian assessment, we investigate ownership patterns, the political economy of intervention and key structural features of the industry. Output grew rapidly in the three decades to 1997; there was a significant increase in technological capacity; and some firms in the components and commercial vehicle sectors were approaching international efficiency. However, the highly interventionist policy regime has resulted in an inefficient industry characterised by “back-to-front” industrialisation, uneconomic production runs and minuscule exports. The industry's fundamental weaknesses were exposed by the crisis of 1997-99. Looking beyond the current difficulties, the future challenge will be to develop a globally efficient and integrated industry.

Date: 2000
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Citations: View citations in EconPapers (23)

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DOI: 10.1080/00074910012331337843

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