Simple Economy Part II: Can Indonesia Achieve A Double Digit GDP Growth?

Posted on May 29th, 2009 at 4:35 pm by Akhyari


Indonesia’s presidential candidates have delivered a strong message to all voters, that once they’re elected, they’ll strive for higher GDP growth in times ahead.  The incumbent Yudhoyono said Indonesia will achieve a strong and sustainable 7% growth starting 2014,  Kalla and his pair were sure that Indonesia can start enjoying 8% in 2011, while Mega and Prabowo tried to convince us that Indonesia can even be buoyed with 10% growth.

The question is simple ! Can Indonesia?
I am not going to discuss the possibility level of those figures, but let me share with you my limited knowledge about how to achieve GDP growth.
First, these are the variables of GDP :
  • Consumption: means private/individual consumption in the economy, how much your family spend.
  • Investment: investing in business or household capital. Please acknowledge, capital here is not SAVING. Saving is the opponent of Investment. Money saved in banks may halt the growth.
  • Government Spending: salaries for public servants, stimulus package, purchase of military equipments, government investment, etc.
  • Export vs Import: make sure, keep the money earned from export is higher than money spent for import.

So, how to achieve a double digit growth? Easy ! Double-digit the percentage of all those 4 variables, especially the investment (including Foreign Direct Investment), and export (you may include Foreign Tourism Expenditures here).

Only by that can we run fast and fly high!

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