World Bank2014-08-142014-08-142014-03https://hdl.handle.net/10986/19326Within the next two decades Indonesia aspires to generate prosperity, avoid a middle-income trap, and leave no one behind as it tries to catch up with high-income economies. Can Indonesia achieve them? This report argues that the country has the potential to rise and become more prosperous and equitable. But the risk of floating in the middle is real. Which pathway the economy will take depends on: (i) the adoption of a growth strategy that unleashes the productivity potential of the economy; and (ii) consistent implementation of a few, long-standing, high-priority structural reforms to boost growth and share prosperity more widely. Indonesia is fortunate to have options in financing these reforms without threatening its long-term fiscal outlook. The difficulties lie in getting the reforms implemented in a complex institutional and decentralized framework. The report identifies the reforms of institutions and processes that govern the functioning of the state as critical for unleashing the country's development potential. The report provides an analytical underpinning for the Bank's country partnership strategy 2009-14 and shapes the Bank's support to the government's rencana pembangunan jangka menengah nasional (RPJMN) 2010-2014.en-USCC BY 3.0 IGOACCOUNTINGAGRICULTUREASSETSAVERAGE PRODUCTIVITYBANK CREDITBANK FINANCINGBASIC EDUCATIONBROKERBROKERAGEBUDGETINGCAPITAL FORMATIONCAPITAL MARKETCAPITAL MARKETSCAPITAL STOCKCASH FLOWCASH FLOWSCLIMATE CHANGECOALCOMMODITY PRICECOMMODITY PRICESCOMPARATIVE ADVANTAGECOMPETITIVENESSCONSUMER DURABLESCOORDINATION FAILURESCORPORATE BONDCORPORATE BOND MARKETCORPORATE BONDSCREDIT CONSTRAINTDEBTDECENTRALIZATIONDEFICIT SPENDINGDEMOGRAPHICSDEPOSITDEVELOPMENT POLICYDOMESTIC DEBTDOMESTIC DEBT SECURITIESDRIVERSECONOMIC GROWTHECONOMIC POLICIESECONOMIC SECTORSECONOMICSECONOMISTSELECTRICITYEMERGING ECONOMIESEMPIRICAL EVIDENCEEMPLOYMENT GROWTHENFORCEMENT MECHANISMSENFORCEMENT OF CONTRACTSENVIRONMENTALEQUIPMENTESCROWEXCHANGE RATEEXISTING WORKFORCEEXPENDITUREEXPORTSEXTREME POVERTYFACTOR MARKETSFINANCIAL CRISISFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL SECTORFINANCING REQUIREMENTFISCAL BALANCEFISCAL DEFICITFISCAL DEFICITSFISCAL POLICYFISCAL REFORMSFOREIGN INVESTORSFORESTRYGDPGDP PER CAPITAGLOBAL ECONOMYGLOBAL INTERESTGOVERNMENT BUDGETGOVERNMENT DEFICITGOVERNMENT EXPENDITUREGOVERNMENT REVENUESGOVERNMENT SPENDINGGRANT ALLOCATIONGROWTH POTENTIALGROWTH RATEGROWTH THEORYHEALTH SPENDINGHOUSEHOLD INCOMESHOUSINGHUMAN CAPITALHUMAN RESOURCESINCOMEINCOME INEQUALITYINCOME LEVELINFLATIONINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE INVESTMENTINSTITUTIONAL DEVELOPMENTINSURANCEINTEREST PAYMENTSINTEREST RATESINTERGOVERNMENTAL FINANCEINVENTORYINVESTMENT CLIMATEINVESTMENT DECISIONSINVESTMENT FUNDSINVESTMENT REQUIREMENTSINVESTOR PROTECTIONISSUANCEJOB CREATIONLABOR COSTSLABOR FORCELABOR MARKETLABOR MARKET ISSUESLABOR MARKET RIGIDITIESLABOR MOVEMENTLABOR PRODUCTIVITYLABOR UNIONSLAND REFORMSLANDOWNERSLEGAL ENVIRONMENTLEGAL RIGHTSLEGAL SYSTEMLICENSESLIVING STANDARDSLOCAL GOVERNMENTSLOCAL INFRASTRUCTUREMANPOWERMATURITYMATURITY SPECTRUMMINIMUM WAGEMORTALITYMULTIPLIER EFFECTSMUNICIPAL BONDSMUNICIPALITIESNATIONAL GOVERNMENTSNATURAL DISASTERNATURAL DISASTERSNOMINAL WAGESOILOIL PRICEPENSIONPENSION FUNDPENSION FUND ASSETSPERVERSE INCENTIVESPHYSICAL ASSETSPHYSICAL SECURITYPOLICY RESPONSEPORTSPRICE INCREASESPRICE RISKSPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATE SECTORPRIVATE SECTOR PARTICIPATIONPRODUCERSPRODUCT MARKETSPRODUCTIVITYPRODUCTIVITY GROWTHPRODUCTIVITY INCREASESPROPERTY RIGHTSPUBLICPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTPUBLIC INVESTMENT IN INFRASTRUCTUREPUBLIC SECTORPUBLIC SERVICEPUBLIC SPENDINGREAL GDPREAL INCOMEREGULATORY BARRIERSREGULATORY FRAMEWORKRESOURCE MANAGEMENTRETAINED EARNINGSRETURNREVENUE COLLECTIONRISK AVERSIONRISK MANAGEMENTRISK PROFILEROADSSAFETYSAFETY NETSAFETY NETSSAVINGSSECURITIESSETTLEMENTSEVERANCE PAYSTRUCTURAL CHANGESUBNATIONAL GOVERNMENTSTAXTAX EXPENDITURESTAX REFORMTAX REFORMSTAX REVENUESTOTAL FACTOR PRODUCTIVITYTOTAL OUTPUTTRADE BALANCETRADE LAWSTRANSPARENCYUNEMPLOYMENTURBAN INFRASTRUCTUREURBANIZATIONVALUATIONWAGE COUNCILSWAGE INCREASESWAGESWEALTH10.1596/19326