Dee-jayh Williams

AP World History
Breslaw
Period 6
Indonesia
Indonesia post Cold War experienced a domestic economy. The colonial state moved
from direct participation, to providing economic and administrative environments for private
firms. Western firms controlled banks, shipping, mining, trade, and plantations. Ethnic Chinese
dominated the domestic economy, giving few opportunities to local merchants. Today Indonesia
is considered a free market economy. The 1945 constitution stated that "Branches of production
which affect the life of most people shall be controlled by the State. Over the years there have
been many events that have influenced Indonesia to cause it becoming a free market economy.
In 1929-1941, world demand for raw materials decreased, leading to the government to
adopting a strict balanced-budget policy, which the aggravated economic and social conditions.
Between the years 1942 and 1944, many businesses failed due to the pacific war. During 19501958 a constitution was created, dictating a unitary republic strong parliament and a weak

government.
This constitution caused a lack in
strong power resulting in widespread confusion and rebellions,the state then out of its own
independent choice seized control of a few sectors. State capitalism began to accelerate as stateowned firms took over foreign plantations and private companies. In 1966-1972, Suharto
removed Sukarno from power and built an authoritarian state, set on bureaucracy and military

control of the economy and government.

In 1970-1981, oil
prices soar, funding a state-led economy and the army; collapsing political factions. And the
Second Five- Year Development plan aimed for better living. The Green Revolution helped
Indonesia become self sufficient, in producing rice seed that responded well to fertilizers. In
1982-1989 liberalization and the shift to export-oriented manufacturing produce growth of
urban manufacturing and resulting environmental impacts.

Increasingly well-organized nongovernmental

organizations and a forward-thinking environmental minister become effective advocates for
environmental management. During 1987-1991, banking regulations were loosened leading to a
surge in the money supply and inflation, forcing a tighter monetary policy. Throughout 19972003, the financial crisis, along with political change, produced a decline in government
authority, granting local governments, private firms, and illegal loggers and fishermen to exploit
natural resources. They were basically given the freedom to destroy the environment.
The Growth graph shows the annual percent change in the value of the gross domestic
product. And just before the 2000s it was down drastically due to the financial crisis. Shrinking
the economy with little government authority. In the well-being graph (1950-2000s) we see that
illiteracy has been decreasing since the 1970s, allowing for people to become educated. The
government spending graph (1950s-2000s) shows that it began to spend less money around the
1960s when they were losing power over the economy.

Indonesias economy continued to try to improve life for its citizens in the last 50 years.
The economy experienced a lot of change during the last 50 years. From a command economy
where the government and socialists were in charge. Finally resulting in a free-market economy.
The people were in control of their economy, limiting the governments authority.