Assessing Indonesia's Sustainable Development: Long-Run Trend, Impact of the Crisis, and Adjustment during the Recovery Period

We adopt the definition of sustainable development as "non-declining welfare per capita", with genuine savings and change in wealth per capita as indicators of "weak sustainability". The results suggest that the overall trend of the Indonesian economy during the past twenty years has not been on a sustainable path. Despite this, the degree of sustainability had been on an improving trend, due to the restructuring of the economy away from the oil and gas sector, and towards greater reliance on secondary and tertiary economic activities. However, forest resource depletion and environmental degradation from water and air pollution have rapidly become a growing problem. The economic crisis had adversely affected the positive trend in sustainability, through a combination of reduced savings rate and increases in natural resource depletion.