Indonesia and Malaysia

Ben Thirkell-White

in The Politics of Poverty Reduction

Published in print March 2012 | ISBN: 9780199692125
Published online May 2012 | e-ISBN: 9780191739286 | DOI:
Indonesia and Malaysia

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Indonesia and Malaysia both represent examples of the ‘new tiger’ economies of South-east Asia which, from the 1960s onward, achieved high rates of GDP growth through policies of labour-intensity, export orientation, heavy investment in human capital and, especially in Indonesia, strong state support for a smallholder-powered green revolution. These policies delivered not only rapid growth but some of the most dramatic falls in poverty ever experienced (from 60% to 15% in the twenty-five years after 1965, in the case of Indonesia). The political motivation underlying these policies is important in both countries, which in the 1960s were menaced by fears about food insecurity and by threats of communist takeover. Both governments, in the 1960s, established semi-authoritarian governmental structures which they looked to high rates of economic growth to legitimate. These structures privileged the rights of indigenous Malay and Indonesian, in relation in particular to Chinese and Indian ethnic groups. During the ‘East Asian’ crisis, the two countries adopted contrasted strategies, which were more successful in more protectionist Malaysia, which imposed controls on outflows of speculative capital, than, in more free-market Indonesia. After the deposition of President Suharto in 1999, there has been a democratic transition, and something of a slowing of the momentum of poverty reduction, in Indonesia.

Keywords: ethnic minorities; Indonesia; Malaysia; labour-intensive growth; green revolution

Chapter.  10679 words.  Illustrated.

Subjects: Economic Development and Growth

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