The impact of globalisation on growth and development ofthe Indonesian economy.

The article discusses economic policies followed by the Indonesian government in relation to globalization and the impact of those policies on Indonesia's economic performance. In the widest sense, globalization refers to the trend towards increasing interactions of all kinds between different countries. During the year 1960 Indonesian economy was experiencing a severe crisis as a result of political turbulence and poor economic management. It was believed that one of the keys to getting the economy on the road to recovery was to encourage foreigners to come to Indonesia, bringing with them scarce capital in order to establish new productive enterprises. Given Indonesia's abundance of natural resources, one of the easiest sectors in which to encourage large-scale new investment was mining. Exploitation of mineral resources played an important role in economic recovery of the country. Indonesian policymakers realized that their abundance of low skilled labor could make the country successful exporter of labor. As the import policy regime was liberalized, exports of labor-intensive manufacturing goods flourished. Indonesia has been benefited from the more rapid augmentation of the capital stock that had been made possible by high capital inflow over the years. For this reason, it seems more important to be thinking about what went wrong with Indonesia's capital account, and about how a recurrence could be prevented or dealt with more effectively, rather than thinking in terms of closing the economy to capital inflow. INSET: Student Activities.