Indonesia is potentially one of the richest countries of the Far East. She possesses the most diversified agricultural economy in the region, a fertile volcanic soil, regular and plentiful rainfall and a good climate; she has great hydro-electric power potential, considerable deposits of almost every known mineral including oil, coal, iron, bauxite, tin; she enjoys a wealth of concentrated labour; and, finally, she encompasses vast untapped regions which await development. As it is, Indonesia is one of the poorest countries of the region, if not the poorest.
The cause of poverty is not hard to find. Indonesia is poor because productivity is low; productivity is low because there is very little capital, including land, technical know-how etc. per worker which, in turn, is because incomes are so low that very little can be saved after the needs of subsistence have been met. Those pockets of saving which do exist are not attracted towards fields of productive investment because the division of labour denoted by modern capital-intensive productive techniques cannot be justified by the limited market. The limited market, again, is but another aspect of low productivity of labour, which thus inhibits development from both sides: the supply of capital and the demand for it.
This text forms the opening two paragraphs of Chapter I Problems in the Supply of Capital (p. 3) of Mike Kidron’s unpublished thesis:
Kidron, Michael. 1957. Problems and patterns of development in overpopulated backward countries with special reference to Indonesia. M.Litt. University of Oxford, Faculty of Social Studies, Balliol College, 289pp.
Last updated on 10 April 2020