Indonesia at risk of sliding into middle income trap

March 17, 201411:14 am293 views
Indonesia at risk of sliding into middle income trap
Indonesia at risk of sliding into middle income trap

FOLLOWING nearly a decade of rapid economic growth fuelled by high commodity prices, Indonesia risks a slump into mediocrity, joining a class of resource-rich countries that fail to generate the jobs needed to lift millions out of poverty and propel them, one day, into the ranks of the rich world.

It’s called the middle income trap: countries such as Brazil and South Africa, steeped in energy and minerals may ride a wave of rapid economic growth only to see boom go to bust, erasing gains because policymakers failed to invest sufficiently in education, infrastructure or governance necessary to attract investment and encourage new business. Indonesia is falling right into it, according to the World Bank’s new Jakarta-based country director Rodrigo Chaves.

“Indonesia needs additional and more focused policy response to stop the economic slide,” he said.

“It needs to address these structural changes because the winds are changing.”

 

source: businesstimes.com.sg

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