Economic Change in Modern Indonesia by Anne Booth (review)

Anne Booth has once again written an authoritative, comprehensive economic history of Indonesia. In fact, with the publication of her Economic Change in Modern Indonesia, this pre-eminent economic historian has seemingly combined two books into one in terms of target audience. The book’s first six chapters comprise a rather straightforward narrative of Indonesia’s economic history that appears to aim at an advanced undergraduate or graduate student audience. In her informative introductory chapter, this recently retired historian from the School of Oriental and African Studies at the University of London makes the incisive point that twentieth century Indonesian history has been punctuated by three watersheds: (1) the 1949 transfer of power from the Dutch to the Republic of the United States of Indonesia (a federal arrangement that swiftly collapsed thereafter); (2) the forced transfer of power from Sukarno, Indonesia’s flamboyant first president, to a trio of army officers led by General Suharto in March 1966 (this occurred amidst the massive slaughter of Indonesian communists and those accused of being such, that Suharto’s army was orchestrating); and (3) Suharto’s resignation from the presidency in May 1998 in the context of the economic chaos caused by the 1997–98 Asian Financial Crisis (AFC). In Chapter 2, Booth describes a colonial regime that was more interested in extracting natural resources from the islands than developing the colony for the benefit of its inhabitants, despite Dutch-developed infrastructure (which in fact was largely confined to the increasingly crowded island of Java). Chapter 3 covers Japan’s World War II occupation of the archipelago and the immediate independent state. Here, Booth shows that the central government, ravaged by a brutal occupation and a subsequently bloody revolutionary war, was not able to build a strong state capable of realizing the nationalist ideals of a just and prosperous society. Mainstream economists typically describe this period (1942–66) as a time of economic disarray characterized by runaway inflation, abysmal economic management, brazen corruption, and declining investment. Booth, however, interjects a partial correction to this dominant discourse by highlighting improved education and health standards for ordinary Indonesians as developmental achievements of this period.

In Chapter 4, Booth strives to give a balanced assessment of the New Order’s (1966–98) economic record. She examines the recognized economic accomplishments of Suharto’s regime — decades of strong pro-poor growth and responsible economic management highlighted by an ability to adapt to changing external environments. Notable in this regard is the collapse in international oil prices, which forced government technocrats to push through a structural transformation by shifting the economy away from reliance on oil tax receipts towards a greater role for export-oriented manufacturing concentrated in the greater Jakarta area. Mainstream economists tend to focus on Suharto’s unwillingness to liberalize the economy when criticizing the New Order’s economic policies. Instead, Booth reserves her criticisms in this chapter and the next (Chapter 5) for underscoring blots on the New Order’s developmental record — from slowing rates of poverty alleviation and growing inequities to environmental degradation and corrosive corruption. Like many of her colleagues, she describes Yudhoyono’s two presidential administrations (2005–15) as a period of unfulfilled expectations where reasonable but ultimately disappointing economic growth figured prominently.

Following this narrative in history, Booth then shifts target audience to scholars of Indonesia in order to examine thematic issues that she has researched for many years (as evidenced by the many self-citations): economic nationalism and the role of the state in the economy (Chapter 7); trends in poverty and income distribution (Chapter 8); and central-regional government relations (Chapter 9). The dual structure of the book necessitates some repetition in these latter chapters, but they do constitute excellent overviews of the many studies and conclusions that have been reached in these areas. Here, Booth, who draws on the work of Indonesian economists intelligently, and again tries to present a balanced view of the evidence. This is most pronounced in Chapter 8. She reviews a mound...