REPUBLIKA.CO.ID, MELBOURNE -- Vice President, Boediono warned that there was a middle income trap overshadowing the developing countries, including Indonesia.
The term was used when a developing country reached a certain level of income, and for various reasons, economic growth stopped.
Indonesia, vice president said, no need to fall into any trap of growth as long as it works hard to improve national productivity and competition. One of the policies to avoid the pitfalls is to improve education and innovation capacities.
"One of the many reasons why the decision-makers in Indonesia seem to want to encourage education and innovation is to avoid Indonesia falling in to middle income trap," he said in a public lecture at Sir Alexander Stewart Theatre, Clayton Campus, Monash University, Friday (15/11) as quoted in wapresri.go.id.
There were some symptoms of potentially affected counties in to middle income trap. Among other were the stagnant in investment ratio, the onset of problems in labor market and employment policies and the failure to improve the manufacturing sector.
Another symptom was when a developing country facing difficulties to compete with low-income countries with very low wage of work.
On the other hand, the symptoms were visible when a state was difficult to compete with the high-income state with advanced technology.
Indonesia, the Vice President added, currently facing difficulties to compete with developing countries in Asia in certain sectors which had lower wages than Indonesia.
The same case occurred when the nation also facing the difficulty to compete with countries such as Taiwan, South Korea and Singapore which have high-tech industries.
"Today, Indonesia can be said, entrapped in the middle. We have to think hard on how to improve our economic competitiveness," he said.
According to him, the discussion about the efforts to avoid middle income trap, will be centered on education and employment as well as innovation and technology issues.
For education, Indonesia still has two major challenges that is to expand access to education for all citizens, and how to quickly improve the quality and relevance of education at all levels.
"Indonesia still has shortage of qualified teachers in all levels of education, while existing human resources are still not optimally distributed. In many parts of the country, there are schools with good facilities encountered shortage of teacher issue," he said.
While in technology and innovation sectors, the VP said in the past a number of policies have been successfully implemented by using a technology based approach with an enormous impact to social and domestic economy.
For example, there was a revolution in agriculture (green revolution) and family planning progress. Not to mention the existence of computers, cell phones as well as budget flights (low cost airlines) those have changed the form of social interaction and economic activities in Indonesia.
"In the future, we want more technological changes that could increase such productivity to be re-emerged," he added.
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