Case Study

Innovate Indonesia: Unlocking growth through technological transformation

Innovate Indonesia: Unlocking growth through technological transformation

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.

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