Three Decades of Structural Transformation of the Indonesian Economy: Has the Turning Point Been Reached?
Abstract
Since its independence, Indonesia has undergone significant changes in the composition of its economic sector, from being heavily dependent on the agricultural sector to becoming a country dominated by the role of the industrial and service sectors. In contrast to a number of previous studies which analyzed the patterns and impacts of structural transformation on poverty and sectoral inequality, the position of this research emphasizes the achievement of turning point conditions, which is an important part of the analysis of economic development. By adopting the approach of Timmer and Akkus (2008), Bathla et al. (2019) and Aggarwal et al. (2022), this study found that the higher the GDP per capita, the GAPag will also decrease. This is because a high level of income per capita will encourage an increase in the output share of the non-agricultural sector, which in turn will open up many job opportunities outside of agriculture, thereby encouraging labor migration from the agricultural to non-agricultural sectors. The test results show that Indonesia has reached a turning point in 1995 at a per capita income level of US$ 1,952.
References
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Setiyanto, A. (2015). Analisis penyerapan tenaga kerja perdesaan lahan kering berbasis perkebunan.
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Yusdja, Y., & Soeparno, H. (2011). Dampak krisis ekonomi terhadap pertanian di Indonesia. Konversi dan Fargmentasi Lahan Ancaman terhadap Kemandirian Pangan. Badan Penelitian dan Pengembangan Pangan, Kementrian Pertanian. Jakarta. From http://www. litbang. pertanian. go. id/buku/konversi-fragmentasi-lahan/BAB-II-1. pdf [Retrieved April 21 2018].
Zhang, X., Yang, J., & Wang, S. (2011). China has reached the Lewis turning point. China Economic Review, 22(4), 542-554.
Zhu, A., Cai, W. (2012). The Lewis turning point in China and its impacts on the world economy. AUGUR WorkingPaper, (1).
Anderson, K., & Ponnusamy, S. (2023). Structural transformation away from agriculture in growing open economies. Agricultural Economics, 54(1), 62-76.
Bairagi, S., Kamal, M. (2019). Is Bangladesh’s Economy Approaching the Lewis Turning Point? South Asia Economic Journal, 20(1), 19– 45. https://doi.org/10.1177/1391561418822208
Basu, Kaushik (2000). Analytical Development Economics: The Less Developed Economy Revisited. Cambridge and London: MIT Press.
Bowonthumrongchai, T. (2019). Lewis Turning Point and Agricultural Development in the Mekong: A Case of Thailand. 社会科学論集= SHAKAIKAGAKU-RONSHU (The Social Science Review), 156, 31-49.
Cheng, S., Heng, D., Ngim, R., Ban, K. (2015). Has Cambodia reached the Lewis Turning point?: final draft.
Corsman, E. (2015). Has China passed its Lewis Turning Point?-A study of regional variation.
Dartanto, T., Yuan, E. Z. W., Sofiyandi, Y. (2017). Structural Transformation and the Dynamics of Income Equality in Indonesia: 1996-2014. Kuznets Beyond Kuznets.
Das, M. M., N'Diaye, M. P. M. (2013). Chronicle of a decline foretold: Has China reached the Lewis turning point?. International Monetary Fund.
Dastidar, A. (2012). Income distribution and structural transformation: Empirical evidence from developed and developing countries. Seoul Journal of Economics, 25(1), 25-56.
Fei, J. C., & Ranis, G. (1964). Development of the labor surplus economy; theory and policy.
Firmansyah, F., Sumarno. ( 2013). Perkembangan wajib belajar 9 tahun di Indonesia periode 1994-2008. AVATARA, e-Journal Pendidikan Sejarah, 1(2), hlm. 198-203.
Fuglie, K. O., Wang, S. L., Ball, V. E. (Eds.). (2012). Productivity growth in agriculture: an international perspective. CABI.
Gollin, D. (2014). The Lewis model: A 60-year retrospective. Journal of Economic Perspectives, 28(3), 71-88.
Hadiana, M. H., Daud, A. R., Utami, A. W. (2019). Analisis efisiensi penggunaan faktor-faktor produksi pada peternakan sapi perah (Survei pada peternak sapi perah, Kecamatan Pangalengan Jawa Barat). Jurnal Sosial Bisnis Peternakan, 1(1), 11-18.
Hubbansyah, A. K., Husodo, Z. A. (2018). The Interdependence Between the Financial Sector and Business Sector in ASEAN 4 Countries. Journal of Indonesian Economy and Business: JIEB., 33(1), 77-94.
Hill, H. (2000). The Indonesian Economy Since 1996. New York: Cambridge.
Islam, R. (2014). The employment challenge faced by Bangladesh: How far is the Lewis turning point. The Indian Journal of Labour Economics, 57(2), 201-225.
Islam, R. (2015). Structural transformation and alternative pathways to the Lewis Turning Point. Paper prepared for the International Seminar on Labor and Employment Issues in the Emerging Rural-Urban Continuum: Dimensions, Processes and Policies, 12–14 March, Hyderabad, India.
Juanda, B., Junaidi, J. (2012). Ekonometrika deret waktu: teori dan aplikasi.
Kuznets, S. (1955). Economic growth and income inequality. The American economic review, 45(1), 1-28.
Lewis, W. A. (1954). Economic development with unlimited supplies of labor. The Manchester School, 22(2), 139–191.
Liu, S. (2019). Research on China’s “Lewis Turning Point” and Efficiency Analysis of Each Province—Based on DEA and SFA Methods. Modern Economy, 10(4), 1178-1189.
Ma, X., & Minami, R. (2022). Dual Economic Structure, Surplus Labour and Rural-Urban Migration. In Growth Mechanisms and Sustainable Development of the Chinese Economy: Comparison with Japanese Experiences (pp. 249-277). Singapore: Springer Nature Singapore.
Mariyono, J., Kompas, T., Grafton, R. Q. (2010). Shifting from Green Revolution to environmentally sound policies: technological change in Indonesian rice agriculture. Journal of the Asia Pacific economy, 15(2), 128-147.
McCaig, B., Pavcnik, N. (2018). Export markets and labor allocation in a low-income country. American Economic Review, 108(7), 1899-1941.
Minami, R., Makino, F., Kim, K. (Eds.). (2014). Lewisian Turning Point in the Chinese Economy: Comparison with East Asian Countries. Springer.
Minami, Ryoshin. 1968. The turning point in the Japanese economy. Quarterly Journal of Economics 82, no. 3: 380–402.
Pingali, P. L. (1997). From subsistence to commercial production systems: The transformation of Asian agriculture. American journal of Agricultural economics, 79(2), 628-634.
Raiyan, N., & Putri, N. D. K. (2021, November). Determinants of the Shifting Labor in Agricultural Sector to Nonagricultural Sectors Evidence in Indonesia. In Seminar Nasional Official Statistics (Vol. 2021, No. 1, pp. 439-448).
Ranis, G. (2012). Labor surplus revisited (Yale University Economic Growth Center Discussion Paper No.1016). New Haven, CT: Yale University.
Ranis, G., & Fei, J. C. (1961). A theory of economic development. The American Economic Review, 51(4), 533–565.
Rostow, W. W. (1956). The take-off into self-sustained growth. The Economic Journal, 66(261), 25-48.
Sen, K. (2019). What explains the job creating potential of industrialisation in the developing world?. The Journal of Development Studies, 55(7), 1565-1583.
Setiyanto, A. (2015). Analisis penyerapan tenaga kerja perdesaan lahan kering berbasis perkebunan.
Silaban, L. R., & Sugiharto, M. S. (2016). Usaha Usaha yang dilakukan Pemerintah dalam Pembangunan Sektor Pertanian. JPPUMA: Jurnal Ilmu Pemerintahan dan Sosial Politik UMA (Journal of Governance and Political Social UMA), 4(2), 196-210.
Supriyati, S. (2010). Dinamika Ekonomi Ketenagakerjaan Pertanian: Permasalahan Dan Kebijakan Strategis Pengembangan.
Susilo, Y. S., & Handoko, B. S. (2002). Dampak Krisis Ekonomi Terhadap Kinerja Sektor Industri: Pendekatan Model Keseimbangan Umum Terapan Indorani.Journal of Indonesian Economy and Business (JIEB), 17(3).
Wie, T. K. (2006). Technology and Indonesia's industrial competitiveness (No. 72). ADBI Research Paper Series.
Wiggins, S. (2016). IFAD RESEARCH SERIES 1-Agricultural and rural development reconsidered: a guide to issues and debates. IFAD Research Series.
Winardi, W., Priyarsono, D. S., Siregar, H., & Kustanto, H. (2019). Peranan kawasan industri dalam mengatasi gejala deindustrialisasi. Jurnal Ekonomi dan Pembangunan Indonesia, 19(1), 5.
World Bank (1996) The Chinese Economy: Controlling Inflation, Deepening Reform, The World Bank Publication, Washington, D.C.
Yamada, T. (2016, September). The Turning Point in the Vietnamese Economy: Revisiting Labor Surplus Theory. In Forum of International Development Studies (Vol. 47, No. 5, pp. 1-15).
Yusdja, Y., & Soeparno, H. (2011). Dampak krisis ekonomi terhadap pertanian di Indonesia. Konversi dan Fargmentasi Lahan Ancaman terhadap Kemandirian Pangan. Badan Penelitian dan Pengembangan Pangan, Kementrian Pertanian. Jakarta. From http://www. litbang. pertanian. go. id/buku/konversi-fragmentasi-lahan/BAB-II-1. pdf [Retrieved April 21 2018].
Zhang, X., Yang, J., & Wang, S. (2011). China has reached the Lewis turning point. China Economic Review, 22(4), 542-554.
Zhu, A., Cai, W. (2012). The Lewis turning point in China and its impacts on the world economy. AUGUR WorkingPaper, (1).
Published
2023-06-30
How to Cite
HUBBANSYAH, Aulia Keiko et al.
Three Decades of Structural Transformation of the Indonesian Economy: Has the Turning Point Been Reached?.
International Journal of Advanced Research in Economics and Finance, [S.l.], v. 5, n. 2, p. 145-155, june 2023.
ISSN 2682-812X.
Available at: <https://myjms.mohe.gov.my/index.php/ijaref/article/view/22964>. Date accessed: 13 oct. 2024.
Section
English Section
