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Indonesian Economics

Essay by   •  May 19, 2011  •  Essay  •  252 Words (2 Pages)  •  850 Views

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Since independence in 1945 until 1966 or during the reign of the Old Order (Orde Lama), Indonesia's agrarian economy falling into a vicious cycle of poverty or caught in a vicious circle (because the newly independent low-income, high consumption desire, the ability of low savings, low investment levels, and consequently the income is low again, and so forth repeatedly) so that, ultimately Indonesia remain poor.

Therefore, since the New Order government (Orde Lama), since 1966, the government is trying to break the vicious circle of the chain by conducting large-scale development (the big push theory) a way to open foreign investment into Indonesia, inviting foreign investment in, and borrow abroad (World Bank, IMF, IRBD, etc). Economic development is the stage of the process to be conducted by a nation to be able to improve living standards and welfare of the people of these nations. It is impossible to do development with expected growth in public savings is caught in a vicious circle of poverty. Needs to be done despite massive investments have borrowed abroad. Indonesian government's foreign debt represents loans from foreign parties, such as friendly countries, international institutions (IMF, World Bank, ADB), other parties who are not residents of Indonesia. Acceptable form of debt that can be either funds, goods or services. Shape of goods, if the government buying capital goods or equipment are paid with war credit. Shaped services mainly the presence of experts from the creditors to provide consulting services on specific areas better known as the Technical Assistance.

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