Why has Indonesia developed much faster than India?

[Gazi]

In contrast with the more open Indonesian economy, India had one of the most controlled economies outside the Communist bloc. This is no surprise considering that socialist ideology has been influential among India’s intelligentsia and policy makers over the past half century. India’s leftist leanings are pervasive, and even today the country seems unwilling to abandon its past dirigisme, which continues to block the necessary privatisation of its state enterprises.

Good Point to add to that I would say South Asia in general Privatizations are seen as Selling the country kind of thing rather then Improving the efficiency of institutions or a lucrative Business deal. This is another reason why Military and Political Conflicts are harmful for a region.

 

[Lonely Hermit]

View attachment 260847

in 1998, India and Indonesia have similar GDP per capita, but after that, Indonesia developed much faster than India

IS this Chinese understand about economic development, Indian Rupee appreciated more than US Dollar from 39 rupee in 2008 to 66 INR today so of course when you take gdp in nominal terms currency of countries which have not appreciated much vis a vi the dollar will show a better growth.

That's why we normally use PPP to measure the purchasing power of a country . If you want such nominal growth then why don't you ask Chinese central to stop manipulating currency and reduce it vis a vi the dollar.

 

[Aepsilons]

Good Point to add to that I would say South Asia in general Privatizations are seen as Selling the country kind of thing rather then Improving the efficiency of institutions or a lucrative Business deal. This is another reason why Military and Political Conflicts are harmful for a region.

What is essential to gather from analyzing South Asia's overall economic fulcrum has been the paradigm of liberal economic strategy. In fact, I should state India is not the only country in the Greater South Asia Region to adopt a Liberal Economic Strategy, but so are Bangladesh, Pakistan, Sri Lanka. Bangladesh, for example, has become an industrial hub for Japan in South Asia, in fact even proportionately larger even than India is. The reason why this is -- is because Bangladesh, just like Indonesia and Thailand, have adopted an open market policy that have encouraged greater FDI , have given autonomy on foreign investors to have ownership of land in the country, and to cooperate as state players for the country. I suppose one of the reasons this has played crucially well in the case of Bangladesh is because Bangladesh enables Japan to have extensive FDI presence in the country, but requires Japan and other overseas investors to pay taxes. In the case of India, well in regards to the policy back in 2012 that is, is that they have stringent policies in FDI and also have high tax schemas for international businesses working in the country. So you can see why it was a 'toxic' environment for international corporations looking to have business ventures in India.

Trade is crucial to national development and one country that seems to have learned from neighbors in balancing security concerns, as well as encouraging greater investments and encouraged hard manufacturing sector development is Dhaka. Bangladesh, a nation of over 156 million, is poised to become a middle income country in 15-20 years if they maintain their fiscal policy, as well as maintain their non-alignment status.

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To illustrate what I'm talking about ,

Ask Japan. You thought that being the biggest Japanese cheerleader that Japan will pour ton of money into India development. LOL

Japan has already pledged to invest over $35 Billion to India, and critical to this gain in confidence has been India's recent liberal economic policy. You see, ever since India has reneged on its former static economic policy (influenced by prior pro-socialist leaders such as Indira Gandhi and the like), India is now slowly (and positively at that) adopted pro-FDI growth, pro-investor confidence measures by tackling graft and corruption.

India's economic situation is a work in progress, and we hope that it continues positively.

Anyways, to illustrate what I am talking about:

Japan promises Narendra Modi $35 billion inflows, but holds out on nuclear deal - The Times of India

India to Get 35 Billion Dollars From Japan for Infrastructure Projects -The New Indian Express

Japanese funding can drive India’s growth

 

[third eye]

View attachment 260847

in 1998, India and Indonesia have similar GDP per capita, but after that, Indonesia developed much faster than India

Indonesia does share disputed land boundaries with Nuclear Powered neighbours .

 

[naveen mishra]

I think as Indonesian rupiah has Ganesh on currency note

no that was old one ,new one is different

 

[Indos]

Before 1998, Indonesia banking system act not professionally. Beside that, Indonesia policy maker see that what makes Indonesia not collapse after 1998 crisis is the strength of its small and middle size businesses.

With the success of Bank Rakyat Indonesia ( the largest bank in Indonesia) in its strategy in focusing in small and medium businesses market make lending to small businesses become trend, many banks follow its strategy.

People start to use credit card as well, starting at 2000, that make money from the bank pour into our consumption side.

It is just ones of the reason. Indonesia economy is actually not really that liberal. We are much less liberal than Thailand/Malaysia/Singapore.

 

[BountyHunter]

View attachment 260847

in 1998, India and Indonesia have similar GDP per capita, but after that, Indonesia developed much faster than India

Baseless , Got any source ?

 

[my2cents]

The best answer would be LOCATION. Indonesia is located in South East Asia having very lower scale Conflicts and comparatively well off Economies around their neighborhood while India on the other hand is located in South Asia which are still struggling with Political Conflicts and Doesnt have focus on economy like South East Asian have done. Being an ASEAN member does provide Indonesians some benefits as well as Large Economy is also very much helpful in setting up Manufacturing sector in the country.

India is open for trade and economic engagement. If the countries of south asia do not trade with each other to their potential then it is the failure of SAARC. Also the neighbourhood until recently was mired in political instabilities in Nepal, Pakistan, Bangladesh and Sri Lanka. With Nepal's new constitution, and friendly governments in Bangladesh and Sri Lanka I do see more trade and economic engagement in our region.

It is Pakistan and Afghanistan which are disengaged for the moment. It is for Pakistan and Afghanistan to come on board and make South Asia an economic engine for the world.

 

[Aepsilons]

It is for Pakistan and Afghanistan to come on board and make South Asia an economic engine for the world.

Without a doubt that is an inevitability. South Asia will be the next growth engine for the world in the coming decades.

That's just FACT.

 

[大汉奸柳传志]

Having a higher GDP per capita doesn‘t mean you are more "developed". only "richer".

Relatively speaking Indonesia is a resource-rich country and India is not. India has to rely on lower value-added industries such as generic drugs，jewelry crafting. While Indonesia can be “richer” than India simply by exporting natural resources and raw materials such as coal，petroleum gas，palm oil，rubber，coffee，lumber，tin，gold，etc..

 

[Nike]

Having a higher GDP per capita doesn‘t mean you are more "developed". only "richer".

Relatively speaking Indonesia is a resource-rich country and India is not. India has to rely on lower value-added industries such as generic drugs，jewelry crafting. While Indonesia can be “richer” than India simply by exporting natural resources and raw materials such as coal，petroleum gas，palm oil，rubber，coffee，lumber，tin，gold，etc..

simply ignorant, Indonesian manufacturing output is almost at equal size against India.

 

[大汉奸柳传志]

simply ignorant, Indonesian manufacturing output is almost at equal size against India.

And resource exporting of Indonesia is how many times of India‘s？

Guess that number answers OP’s question perfectly well.

 

[Dungeness]

In contrast with the more open Indonesian economy, India had one of the most controlled economies outside the Communist bloc. This is no surprise considering that socialist ideology has been influential among India’s intelligentsia and policy makers over the past half century. India’s leftist leanings are pervasive, and even today the country seems unwilling to abandon its past dirigisme, which continues to block the necessary privatisation of its state enterprises.

After independence controls were imposed on prices, industrial investment, bank lending, the capital market, imports and even on some exports. The state retained ownership of several key industries, while a reservation scheme was introduced for small-scale enterprises. Domestic industry was heavily protected, competing imports were mostly banned, and the government restricted exports and foreign direct investment. Private monopolies were also restricted, which prompted many of India’s private companies to invest overseas, in both developing and developed countries. For their part, foreign multinationals have mostly been lured into joint ventures with India’s state-owned enterprises to service the large domestic market rather than export markets. As a result, in the first four decades of its independence India’s economy grew at an average annual rate of only 3 per cent.

The twist ending is that India introduced economic liberalisation measures more than 20 years later than Indonesia. Though they were implemented much later, these measures symbolised a decisive policy shift from statist nationalism to a liberal economic strategy. The outcome of that shift has been rapid economic growth and since the early 1990s India’s economy has grown at a pace second only to China.

The Indians still have much to do. With a population of over 1.2 billion, their main national mandate would be to lift some 600 million people out of poverty. And i think that should be their main priority, more so than comparing with other countries.



Reference: East Asia Forum
Retrieved from: Comparing India’s and Indonesia’s economic performance | East Asia Forum



Are you making indirect reference to social issues in their country? E.g, the poverty actualization , or are you making reference to infrastructural limitation ? Please be direct with me.

Good post！I have also wondered how the poorest segment of Indian society fared economically after 20 years breakneck development that took place in India. But you seem to be a different person today. The other day you were praising India's caste system. Wondering why.

 

[AndrewJin]

Good post！I have also wondered how the poorest segment of Indian society fared economically after 20 years breakneck development that took place in India. But you seem to be a different person today. The other day you were praising India's caste system. Wondering why.

His viewpoints quite often contradict with previous ones, I have got used to it.

 

[Dungeness]

Having a higher GDP per capita doesn‘t mean you are more "developed". only "richer".

Relatively speaking Indonesia is a resource-rich country and India is not. India has to rely on lower value-added industries such as generic drugs，jewelry crafting. While Indonesia can be “richer” than India simply by exporting natural resources and raw materials such as coal，petroleum gas，palm oil，rubber，coffee，lumber，tin，gold，etc..

Also, Indonesia has a much more investor friendly environment. That is why there are many Japanese, Korean manufacturing facilities there, but not in India.

Indonesia does share disputed land boundaries with Nuclear Powered neighbours .

This is not a very good excuse. Sorry, my friend!