Maximizing Opportunities from Global Supply Chains

Abstract

The pattern of global trade in goods has changed substantially over the last two decades with a rapid increase in trade in intermediate inputs, such as parts and components, and a significant increase in the role of services inputs. Indonesia can benefit greatly from increasing its participation in global supply chains. With GDP expected to grow 5-6 percent annually, Indonesia will by 2030 have an additional 90 million middle class consumers, while 70 percent of the population will be of working age. At present, Indonesia is not reaping gains from economic globalization to the fullest extent due to weak integration into global supply chains. Better integration would allow Indonesia to further diversify its economy. To do so, however, Indonesia needs to improve its infrastructure, the business environment and education levels in order to better participate in, and reap the benefits from, global supply chains.