Turbulence has been the hallmark of the course of Indonesian economic growth. Indonesia was dubbed a “chronic drop-out” in economic performance in 1968, but it then immediately embarked on a growth spurt. Just as accolades to Indonesia's economic pragmatism and economic orthodoxy were reaching a new height, Indonesia's economy shattered during the Asian financial crisis of 1997–99. Indonesia has once again risen phoenix-like from that disaster, and the bounce back has been resilient in the face of the 2008 global financial crisis. Despite the commendable progress, however, its growth seems to be hindered. Indonesia must now tackle the two most important constraints to its continued high growth: logistics and infrastructure.

The authors thank Anwar Nasution, James Wen, and all the participants of the Asian Economic Panel meeting at Columbia University on 24–25 March 2011, and acknowledge the feedback from seminar participants at the Harvard Kennedy School on 28 March 2011. We also thank Thee Kian Wie for useful references and discussion.

This content is only available as a PDF.