Do We Really Need More Economists: The Prospect of Growth in Indonesia

As such, although the movement and plan of Indonesia's 4.0 strategy needs to be done by the country, what needs to be considered is the fact that Indonesia lacks the tools and  labor that can help stimulate innovation in industrial sectors, especially when the labor market of Indonesia lacks engineers that could essentially sustain economic recovery through research and innovation that they can actually initiate. 

The Negligence of Industries 

With Indonesia being able to face industrial growth in the 1990s and early 2000s, Indonesia was seen as a country that was on track towards industrialization and economic growth. However, as the years go by, Indonesia shifted its focus from their manufacturing sector to services and even agriculture, resulting in the discontinuation of the progress they have already made ages ago. Instead of fixating their development on computers, they concentrated on palm oil as their main source of exports. This in turn resulted in the premature deindustrialization of the developing country itself, ignoring what could have been in terms of maximizing their manufacturing sector. 

This all started after the economic crisis the country faced in the year 1998, with Indonesia being more dependent on imports from other countries to substitute the needs for their industries due to the economic crisis. Because of this, Indonesia was no longer able to manufacture the innovations they initially had and quickly shifted back to agriculture, whilst also focusing on their service sectors (Muhammad et al., 2022). This is also constituted by the lack of a government's protection program in terms of policies related to the improvement of their manufacturing sector, being that it does not provide trade protectionism policies similar to countries like China or even the United States. 

Knowing that Indonesia itself is a developing country, it can be safely said that Indonesia lacks skilled workers, with only 15.3 million people or 13.3 percent of the total workforce in Indonesia working in the industry sector, making it capital intensive (Indonesia Investments, 2016). This makes it even more difficult as the demand for the industrial sector labor market is higher than the supply itself as the interest of the people in the country is not directed towards working in the manufacturing sector (Indonesia Investments, 2016). 

Moreover, the country itself has a weak purchasing power which causes less demand for manufactured goods (Indonesia Investments, 2016). This, in turn, contributes to the mindset that Indonesia "does not have to produce manufactured goods", meaning that there is no actual need of increasing the labor market in those industries. 

Also, given the fact that the global economy is vastly developing and growing, Indonesia believes that it would be harder for them to compete in the international market in terms of manufacturing. The development trajectory of China and Beijing, for instance, has made it more difficult for developing countries to attain those standards (Muhammad et al., 2022). In a way, it felt as if Indonesia needed to learn more from other countries in terms of providing the proper tools to nurture the people's understanding in the technical side, but in a way Indonesia is only fluent in the theoretical side to improve their economy. 

Are We in Need of Observers or Initiators?

So, the question every job interviewers ask remains: Do we really need more economists or should we focus on the growing labor market of STEM-related jobs? One of the biggest factors to the slow-paced improvement of the manufacturing sector in Indonesia is the lack of awareness of the government in terms of stimulating industrial firms, based on Lall and Rao (1995). The Government body in Indonesia should be able to learn from the ASEAN-2, that encourages the country to develop and diversify their industrial firms through proper assistance in terms of its finance and also the technical side to it. From that, it is important to acknowledge the lack of promotion and encouragement from the government and from the country itself leads to the need of STEM-related jobs or initiators.

However, it is important to know that "the government of Indonesia pays little attention and indicates a slow response to issues" related to industrial sectors (Adam, 2001). Through this, the understanding that economists or observers of a country that could correspond to the pace of the manufacturing sector is essential as well to the country itself. Although the recognition of a trade-off is absolute, the balance of job markets is an important factor to the development of the country. Together with the preservation of science and technology in manufacturing industries, Indonesia has the ability to bounce back as one of the "Asian Miracles" (Muhammad et al., 2022). 

References:

Adam, L. (2001). Indonesia's Industrialization: Strategies, Achievements, and Problems. Ekonomi dan Keuangan Indonesia, 49(2), 153-174.

Badan Koordinasi Penanaman Modal. (2019). Making Indonesia 4.0: Indonesia's strategy to enter the 4th generation of industry revolution. BKPM. https://www.investindonesia.go.id/en/why-invest/indonesia-economic-update/making-indonesia-4.0-indonesias-strategy-to-enter-the-4th-generation-of-ind