Indonesia : Research and Development Financing

Abstract

How much Indonesia spends on research and development (R and D) financing, where it spends it, and how it spends it, will affect the level of the country's growth for many years to come. Indonesia currently has the opportunity to consider the nature of its economic growth and where state resources may be concentrated in order to foster expansion in new areas. For the country to achieve growth that allows it to capture more value-added on the goods and services it produces, it is likely that it will need to be more innovative. This public expenditure review (PER) starts with examining Indonesia's current R and D performance, and then looks into the recurrent levels of spending on R and D, and how the spending is administered, identifying key constraining factors that affect Indonesia's R and D performance. With the available data and knowledge of the institutional framework, an understanding of the R and D system is developed. With this understanding it was possible to identify the constraining factors in Indonesia's use of resources to produce R and D outputs, development of innovative goods and products to capture higher levels of value added, and support for social public policy formulation and implementation. This analysis will take place primarily against the background of international comparisons and the government's policy aims. For the most part this PER will concentrate on the public R and D system, that is, the institutions and research funded with public money and operating under the aims defined by the government. It deals with the current financing and institutional issues and how, if necessary, these may be addressed.