International production/distribution networks and Indonesia

This study examines the industrialization performance of Indonesia through a comparative evaluation with other East Asian economies. While neighboring countries actively formulated international production/distribution networks, Indonesia fell behind in utilizing the benefits of globalizing corporate activities. International production/distribution networks are supported by new economic thought such as fragmentation, agglomeration, and theories about corporate firm; and a policy package of development strategies should be designed to utilize such opportunities. The design of Indonesia's development strategies and "institutions," however, does not conform to the globalizing world because the presence of network-forming foreign companies is not large enough to make them influential "actors." This author argues that the traditional comparative advantage argument for Indonesia's economic development is possibly misleading. Rather, Indonesia must learn the experience of its neighboring countries and introduce foreign companies as new actors to break the old "structure".