TY - JOUR
T1 - The Importance of Financial Liberalisation for Economic Growth: The Case of Indonesia
AU - Gupta, Krisna
PY - 2021
Y1 - 2021
N2 - Indonesia has been struggling to return to the levels of economic growth it achieved
before the Asian financial crisis. The government has been working on more liberal
investment policies to attract external finance, both through portfolio investment and
direct investment, while also trying to control the risk premia that may be associated
with financial liberalisation. This article examines the mechanisms of the policies to,
among other things, improve access to finance and encourage productivity growth
through more effective matching of capital with labour, as well as the use of global
best practices. The potential gains for the Indonesian economy are shown using an
extension of the Global Trade Analysis Project (GTAP) model that covers possible
changes in the cost of capital. The results indicate that the Indonesian economy could
benefit substantially if the government allows a short-term trade deficit.
AB - Indonesia has been struggling to return to the levels of economic growth it achieved
before the Asian financial crisis. The government has been working on more liberal
investment policies to attract external finance, both through portfolio investment and
direct investment, while also trying to control the risk premia that may be associated
with financial liberalisation. This article examines the mechanisms of the policies to,
among other things, improve access to finance and encourage productivity growth
through more effective matching of capital with labour, as well as the use of global
best practices. The potential gains for the Indonesian economy are shown using an
extension of the Global Trade Analysis Project (GTAP) model that covers possible
changes in the cost of capital. The results indicate that the Indonesian economy could
benefit substantially if the government allows a short-term trade deficit.
U2 - 10.1080/00074918.2020.1747596
DO - 10.1080/00074918.2020.1747596
M3 - Article
SN - 0007-4918
VL - 57
SP - 175
EP - 201
JO - Bulletin of Indonesian Economic Studies
JF - Bulletin of Indonesian Economic Studies
IS - 2
ER -