Labour-Intensive Industrialisation in Indonesia, 1930-1975: Output Trends and Government Policies

Growth of industrial output for domestic consumption during 1930-75 was significant, but not
continuous; growth (1932-41) was followed by decline (1942-46), recovery (1947-57), stagnation
(1958-65) and acceleration (1966-75). Protective trade policies triggered growth in the 1930s, when
industry policy favoured a balanced development of capital-intensive large and medium-sized ventures
and labour-intensive small firms and firms in light industries. The gist of this policy continued during
the late-1940s and 1950s, but industry policies increasingly favoured large, capital-intensive stateowned
enterprises. By 1960, policies no longer targeted small ventures and labour-intensive
industrialisation. After 1966, economic stabilisation and deregulation rekindled the momentum of
industrialisation. Although policy interest in the development of small industrial ventures revived in
1975, large-scale labour-intensive industrialisation did start until the mid-1980s.