Reports and articles

Innovate Indonesia: Unlocking growth through technological transformation

Published on March 30th 2020

This study, developed by the IfM's Policy Links Unit for Indonesia's Ministry of Finance and the Asian Development Bank, explores policy options to facilitate Indonesia’s technological transformation and unlock its economic growth potential.

Indonesia is the world’s tenth-largest economy, and the largest in the Association of Southeast Asian Nations (ASEAN). It has sustained average economic growth rates above 5% since 2000 and made significant strides in reducing poverty. 

Yet economic analyses point to a number of factors constraining Indonesia’s growth potential, notably tepid productivity growth and slowing expansion in the labour force and manufacturing industries. 

Technological transformation could add $2.8 trillion to the Indonesian economy by 2040

Technology has a key role to play in overcoming these constraints and boosting future growth. Adopting new technologies allows industry to become more productive by enabling more efficient resource use, new product development, and entry into new markets.

Technology adoption could add up to $2.8 trillion to the Indonesian economy by 2040, spurring growth in gross domestic product (GDP) by an additional 0.55 percentage points annually over the next 2 decades. This was one conclusion of the study, which explored the impact of new technologies across major economic sectors in Indonesia and identified policy options with the potential to support technological transformation.

Explore the study 

The study explores the critical role of technology transformation in boosting Indonesia’s economic development, builds an in-depth understanding of technology and sector-specific opportunities and challenges, plots Indonesia’s position in the technological transformation journey, takes a “deep dive” into Industry 4.0 in Indonesia, and concludes by recommending five key pillars for policy action.

innovate-indonesia-infograph

Michele Palladino, Carlos López-Gómez, David Leal-Ayala, and Jennifer Castaneda of the Policy Links Unit supported the drafting of this study. They drew upon the expertise of more than 15 experts across the IfM, the Department of Engineering and the University of Cambridge. This study was published by the Asian Development Bank and distributed under a Creative Commons 3.0 IGO Licence.

Download the report
Download the report

Share this resource

Copy link
Link Copied to clipboard