Strategies on Global Value Chain (GVC) to address Growth Trap and Premature Deindustrialization in Indonesia
Irwanda Wisnu Wardhana
the Indonesia Fiscal Policy Agency
Abstract
Prominent economists have diagnosed a growth trap problem that has hindered Indonesia from optimum economic development. For years, the economic growth rate has stuck at five percent. Furthermore, there is growing concern that Indonesia is experiencing premature deindustrialization. The terminology refers to a situation when the contribution of the manufacturing sector is declining and is lower than the services sector; before a country achieved a high-income status. This study aims to suggest strategic options to deal with the growth trap and the premature deindustrialization by optimizing opportunities offered by the global value chain practices. It will utilize the following tools of the strategy-formulation analytical framework. The Competitive Profile Matrix will compare the competitiveness of Indonesia and its rivals. In addition, the Grand Strategy Matrix to evaluate the competitive position and market growth among relevant countries. Finally, the Quantitative Strategic Planning Matrix (QSPM) will be employed to determine strategies to exploit global value chain opportunities. Suggested strategies from this research will be beneficial for policymakers to lay out policy proposals and actions.
Keywords: global value chain, growth trap, premature deindustrialization, strategy
Topic: Business Strategies on GVC Participation