Indonesia's Economy
Suharto's New Order
How Suharto's authoritarian "New Order" from 1966 to 1998 delivered rapid growth using technocrats, oil revenue and export factories, alongside corruption.
Suharto ruled Indonesia from 1966 to 1998.
The Berkeley Mafia
US-trained economists, nicknamed the “Berkeley Mafia”, managed macroeconomic policy: controlling inflation, balancing budgets and attracting investment.
Growth
- Indonesia grew around 7 percent a year for long stretches.
- Poverty fell sharply.
Oil boom
1970s oil revenues funded roads, schools and rice programmes. Unlike Nigeria, Indonesia invested much oil money in agriculture and avoided the worst Dutch disease.
Rice self-sufficiency
Green Revolution seeds and fertiliser subsidies helped Indonesia become self-sufficient in rice in 1984.
Export factories
From the 1980s, reforms promoted manufacturing exports like textiles and electronics.
Cronyism
Suharto’s family and allies controlled large businesses and received favours, creating “crony capitalism”.
In the 1970s, oil money built primary schools across Indonesia. Research by economist Esther Duflo found this programme raised education and wages.
Suharto's era brought cronyism and repression.
- Suharto ruled from 1966 to 1998.
- Technocrats managed policy; growth averaged about 7 percent.
- Oil money funded schools and agriculture.
- Crony capitalism grew around Suharto's family.
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