Structural changes in a reforming world economy: Implications for Indonesia

How will rapid East Asian industrialisation and international trade policy reforms affect Indonesia's economy? Taking an economy-wide perspective and drawing on projections to 2005, based on a global applied general equilibri um model (GTAP), we show the impact of Uruguay Round implementation, and ex plore other international influences on Indonesia's and neighbouring econom ies. Trade reforms likely to accompany China's (and Taiwan's) membership of the WTO are projected to boost the competitiveness of Indonesia's primary sectors at the expense of Light manufacturing and the overall economy, whil e failure by OECD countries to honour Uruguay Round obligations to open the ir textile and clothing markets would reduce industrialisation in the regio n, slowing growth in its net food imports. The benefits to Indonesia of APE C liberalisations are also reported. All projections were completed in 1997 before the enormity of the financial crisis became clear; follow-on resear ch should quantify the growth slowdown's impact on these results.