The Emergence of a National Economy: An Economic History of Indonesia, 1800-2000

By Yunus, Nizam A. | Journal of Southeast Asian Economies, December 2003 | Go to article overview

The Emergence of a National Economy: An Economic History of Indonesia, 1800-2000


Yunus, Nizam A., Journal of Southeast Asian Economies


The Emergence of a National Economy: An Economic History of Indonesia, 1800-2000. By Howard Dick, Vincent J. H. Houben, J. Thomas Lindblad, and Thee Kian Wie. Honolulu: Asian Studies Association of Australia in association with Alien & Unwin and University of Hawaii Press, 2002. Pp. xvii + 286.

This is the second book on Indonesian economic history that covers a very long period; the first being the book by Anne Booth The Indonesian Economy in the Nineteenth and Twentieth Centuries (1998). The title of this book mentions 1800-2000, but one chapter is devoted to the history of the period prior to 1800, dating back to the period of the Vereenigde Oost-Indische Compagnie (VOC), or the Association of Dutch Trading Companies in East India. This book is special because its authors are scholars who have spent many years studying the economic history of Indonesia, with many publications to their names. It is rich in information on past economic events, reflecting extensive and intensive research that has been undertaken by the authors. This book has covered almost all the available information on this subject.

The economy of the chain of islands in Southeast Asia, now called Indonesia, has been developed in successive stages. In 1966 it became a nation-state economy with the introduction of the New Order. The successive stages are as reflected in the chapter titles. In the Introduction, Howard Dick points out that the periodization was based on the waves of globalization or capitalist economic penetration that have washed through the archipelago for centuries.

The first penetration was in the seventeenth century with the arrival of the VOC for trade. The history of this period is the subject of Chapter 2 (Houben). The second penetration was during the nineteenth century, and the activities are characterized by investments mainly in plantation and the growth of the Dutch company on the island of Java and Outer Java. The story of this part is the subject of Chapters 3 (Houben) and 4 (Lindblad). The third penetration was from the late nineteenth century to early twentieth century, during which the colonial government governed the archipelago, and the islands were officially named Netherlands Indies. During this period, Java Island and the Outer Islands were integrated into a single colonial polity, and the colonial economy was export oriented. This is the subject of Chapter 5 (Lindblad).

From the first page, this book brings the readers to a journey from the period of pre-industrial to modern industrial time. In that journey we learn how the chain of islands became interlinked through economic activities, and the economic activities became more and more complex. Finally, a cohesive economic entity was formed, but the country was still not a nation-state yet. This book also describes the gradual changing of the structure and system, which is the essence of history.

Finally, Chapter 6 "Formation of the Nation State, 1930-1966" presents the most critical period when the national economy of Indonesia was being formed. This book suggests that during the period 1945-1966, when Indonesia became an independent nation-state, its economy was still in the formation stage. The Indonesian economy became a cohesive structure and the national economy of islands integrated starting from 1966.

Two decades prior to 1965 are significant to Indonesian history as an independent state. During the years 1945 to 1965, Indonesia's history is filled with political struggle. This new country experienced two extreme political systems, from the liberal system in the 1950s to a centralized socialist type from 1959 to 1965. This was the period of "experimentation" and "searching" for the system and format of the economy as well as politics, by Indonesians, until the New Order was introduced. …

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