Economic and Social Change in Indonesia

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Topic 1: European economic and political expansion in Southeast Asia in the last quarter of the 20th century resulted in the greater integration of the region into the international economy. Six ‘new’ states emerged – Indonesia, Malaya, Burma, the Philippines, Indochina and Thailand. Discuss economic and social change in the region with reference to ONE Southeast Asian state. Economic and social change within Indonesia Introduction After over a quarter century of sustained economic growth, Indonesia was struck by a major economic crisis at the end of the 20th Century. This paper examines the impact of the crisis on economic and social change within the region. (Cameron 1999) The crisis, which worked its way through many of…show more content…
Not only has the economy grown rapidly over the last quarter century but there has also been dramatic demographic and social change. Fertility rates have declined substantially and there have been massive investments in human capital. This can be seen in secondary school enrollment rates which have risen from a mere 6% in 1960 to more than 50% today; primary school enrollment is essentially universal. (Poppele 1999) The investments are also reflected in the health of the population: at birth, the average Indonesian today expects to live to the age of 61 which is 50% longer than he or she expected 30 years ago. Thus, the labor force has not only grown dramatically in size but also in quality. The consequences of these improvements are reflected in significant rising real wage levels over the last three decades. (Smith 2002) Pride in its past economic achievements and optimism about its future were suddenly challenged by the economic crisis which was accompanied by dramatic shifts in the economic and political landscape of the country. As indicated in Figure 1, the rupiah came under pressure in the last half of 1997 when the exchange rate began showing signs of weakness. After falling by half from around 2,400 per US$ to about 4,800 per US$ by December 1997, the rupiah collapsed in January 1998 when, over the course of just a few days, the exchange rate fell by 400% to Rp16,000 per US$. Although
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