AN IMPACT OF ECONOMIC GLOBALIZATION ON THE INDONESIAN INDUSTRIALIZATION PERFORMANCE

Abstract

In globalization era, a process of long-term economic development can causes a change in a country’s economic structure. Indonesia, for example, has transformed from economy dominated by an agricultural sector to economic modern dominated by an industrial sector with dynamic increasing returns to scale as a main drive for economic growth. A manufacturing industrial sector as a characteristic of the Indonesian modern economy is not optimal. A manufacturing industry sector phenomenon in developed countries, included in Indonesia, is relatively underdeveloped. This results from such factors as low-skilled human resources and low technology. Such a condition is greatly influenced by low-structural aspect such as dependence on high import, limited export and market, regional concentration, middle-sized technology industry, and low technology industry development; and low-organizational aspect such as underdeveloped-small-sized industry that consequently produces relatively small added-value, low capacity in technology transfer and development, and low human resource. The Indonesian manufacturing industrial performance makes export development and quality and competitive export low. As a solution to the problem, it is necessary to develop such components as labor force efficiency, labor force’s education, organizational performance, financial-organizational performance, government policy evaluation, and accessibility to international trade. These will significantly affect an increase in economic growth and competitive export as a result of empowering a manufacturing industrial performance. Accordingly, for planning the future development, it needs to find an alternative industrialization strategy for developing a manufacturing industrial sector in this country. This strategy must increase an economic added-value, economic efficiency, and fall any dependence on import.