The Reason

A well written piece by Dani Rodrik, just to remind what’s the beginning of (maybe) tomorrow challenges for Indonesia:

“By contrast, most of today’s emerging markets are deindustrializing prematurely. Services are not tradable to the same extent as manufactured goods, and for the most part do not exhibit the same technological dynamism. As a result, services have proved to be a poor substitute to export-oriented industrialization so far.”
“For developing economies, the three key growth fundamentals are acquisition of skills and education by the workforce; improvement of institutions and governance; and structural transformation from low-productivity to high-productivity activities (as typified by industrialization).”
“Unlike East Asian economies, today’s emerging markets cannot rely on export surpluses in manufactures as their engine of structural transformation and growth. So they are forced to rely more on the longer-term fundamentals of education and institutions.”
“Cheap external finance, plentiful capital inflows, and commodity booms helped hide many such shortcomings and fueled 15 years of emerging-market growth.”

— -end of post #8

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