Economy of Germany

Mughal era (1526–1793)

Main article: Mughal economy
See also: Muslin trade in Bengal and Economy of the Kingdom of Mysore
The Indian economy was large and prosperous under the Mughal Empire, up until the 18th century.^[113] Sean Harkin estimates China and India may have accounted for 60 to 70 percent of world GDP in the 17th century. The Mughal economy functioned on an elaborate system of coined currency, land revenue and trade. Gold, silver and copper coins were issued by the royal mints which functioned on the basis of free coinage.^[114] The political stability and uniform revenue policy resulting from a centralized administration under the Mughals, coupled with a well-developed internal trade network, ensured that India–before the arrival of the British–was to a large extent economically unified, despite having a traditional agrarian economy characterised by a predominance of subsistence agriculture.^[115] Agricultural production increased under Mughal agrarian reforms,^[113] with Indian agriculture being advanced compared to Europe at the time, such as the widespread use of the seed drill among Indian peasants before its adoption in European agriculture,^[116] and possibly higher per-capita agricultural output and standards of consumption then 17 century Europe.^[117]
Mughal princes wearing muslin robes in 1665 CE.
The Mughal Empire had a thriving industrial manufacturing economy, with India producing about 25% of the world's industrial output up until 1750,^[118] making it the most important manufacturing center in international trade.^[119] Manufactured goods and cash crops from the Mughal Empire were sold throughout the world. Key industries included textiles, shipbuilding, and steel, and processed exports included cotton textiles, yarns, thread, silk, jute products, metalware, and foods such as sugar, oils and

Economy of Indonesia

The economy of Indonesia is the largest in Southeast Asia and is one of the emerging market economies of the world. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialized country.^[27] It is the 15th largest economy in the world by nominal GDP and the 7th largest in terms of GDP (PPP). Estimated at US$40 billion in 2019, Indonesia’s Internet economy is expected to cross the US$130 billion mark by 2025.^[28] Indonesia depends on domestic market and government budget spending and its ownership of state-owned enterprises (the central government owns 141 enterprises). The administration of prices of a range of basic goods (including rice and electricity) also plays a significant role in Indonesia's market economy. However, since the 1990s, the majority of the economy has been controlled by individual Indonesians and foreign companies.^[29][30][31]

In the aftermath of the 1997 Asian financial crisis, the government took custody of a significant portion of private sector assets through the acquisition of nonperforming bank loans and corporate assets through the debt restructuring process and the companies in custody were sold for privatization several years later. Since 1999 the economy has recovered, and growth has accelerated to over 4–6% in recent years.^[32]
In 2012, Indonesia replaced India as the second-fastest-growing G-20 economy, behind China. Since then, the annual growth rate has fluctuated around 5%.^[33][34]
Corruption in public institutions has historically been the major hurdle in keeping foreign business away and seen Indonesia flail towards the middle of the global Transparency International rankings.^[35]

Sukarno era[edit]

In the years immediately following the proclamation of Indonesian independence, both the Japanese occupation and conflict between Dutch and Republican forces had crippled the country's production, with exports of commodities such as rubber and oil being reduced to 12 and 5% of their pre-WW2 levels, respectively.^[36] The first Republican government-controlled bank, the Indonesian State Bank (Bank Negara Indonesia, BNI) was founded on 5 July 1946. It initially acted as the manufacturer and distributor of ORI (Oeang Republik Indonesia/Money of the Republic of Indonesia), a currency issued by the Republican Government which was the predecessor of Rupiah.^[37] Despite this, currency issued during the Japanese occupation and by Dutch authorities was still in circulation, and the simplicity of the ORI made its counterfeiting relatively easy, worsening matters.^[38] Between 1949 and 1960, Indonesia experienced several economic disruptions. The country's independence recognized by the Netherlands, the dissolution of the United States of Indonesia in 1950, the subsequent liberal democracy period, the nationalisation of De Javasche Bank into the modern Bank Indonesia,^[39] and the takeover of Dutch corporate assets following the West New Guinea dispute,^[40] which all resulted in the devaluation of Dutch banknotes into half their value.^[41]
During the guided democracy era in the 1960s, the economy deteriorated drastically as a result of political instability. The government was inexperienced in implementing macro-economic policies, which resulted in severe poverty and hunger. By the time of Sukarno's downfall in the mid-1960s, the economy was in chaos with 1,000% annual inflation, shrinking export revenues, crumbling infrastructure, factories operating at minimal capacity, and negligible investment. Nevertheless, Indonesia's post-1960 economic improvement was considered remarkable when taking consideration of how few indigenous Indonesians in the 1950s had received a formal education under Dutch colonial policies.^[42]

New Order[edit]

Following President Sukarno's downfall, the New Order administration brought a degree of discipline to economic policy that quickly brought inflation down, stabilized the currency, rescheduled foreign debt, and attracted foreign aid and investment. (See Inter-Governmental Group on Indonesia and Berkeley Mafia). Indonesia was until recently Southeast Asia's only member of OPEC, and the 1970s oil price rise provided an export revenue windfall that contributed to sustained high economic growth rates, averaging over 7% from 1968 to 1981.^[43]
With high levels of regulation and dependence on declining oil prices, growth slowed to an average of 4.5% per annum between 1981 and 1988. A range of economic reforms was introduced in the late 1980s, including a managed devaluation of the rupiah to improve export competitiveness, and de-regulation of the financial sector.^[44] Foreign investment flowed into Indonesia, particularly into the rapidly developing export-oriented manufacturing sector, and from 1989 to 1997, the Indonesian economy grew by an average of over 7%.^[45][46] GDP per capita grew 545% from 1970 to 1980 as a result of the sudden increase in oil export revenues from 1973 to 1979.^[47] High levels of economic growth masked several structural weaknesses in the economy. It came at a high cost in terms of weak and corrupt governmental institutions, severe public indebtedness through mismanagement of the financial sector, the rapid depletion of natural resources, and culture of favors and corruption in the business elite.^[48]
Corruption particularly gained momentum in the 1990s, reaching to the highest levels of the political hierarchy as Suharto became the most corrupt leader according to Transparency International.^[49][50] As a result, the legal system was weak, and there was no effective way to enforce contracts, collect debts, or sue for bankruptcy. Banking practices were very unsophisticated, with collateral-based lending the norm and widespread violation of prudential regulations, including limits on connected lending. Non-tariff barriers, rent-seeking by state-owned enterprises, domestic subsidies, barriers to domestic trade and export restrictions all created economic distortions.
The 1997 Asian financial crisis that began to affect Indonesia became an economic and political crisis. The initial response was to float the rupiah, raise key domestic interest rates, and tighten fiscal policy. In October 1997, Indonesia and the International Monetary Fund (IMF) reached agreement on an economic reform program aimed at macroeconomic stabilization and elimination of some of the country's most damaging economic policies, such as the National Car Program and the clove monopoly, both involving family members of Suharto. The rupiah remained weak, however, and Suharto was forced to resign in May 1998 after massive riots erupted. In August 1998, Indonesia and the IMF agreed on an Extended Fund Facility (EFF) under President B. J. Habibie that included significant structural reform targets. President Abdurrahman Wahid took office in October 1999, and Indonesia and the IMF signed another EFF in January 2000. The new program also has a range of economic, structural reform, and governance targets.
The effects of the crisis were severe. By November 1997, rapid currency depreciation had seen public debt reach US$60 billion, imposing severe strains on the government's budget.^[51] In 1998, real GDP contracted by 13.1%, and the economy reached its low point in mid-1999 with 0.8% real GDP growth. Inflation reached 72% in 1998 but slowed to 2% in 1999. The rupiah, which had been in the Rp 2,600/USD1 range at the start of August 1997 fell to 11,000/USD1 by January 1998, with spot rates around 15,000 for brief periods during the first half of 1998.^[52] It returned to the 8,000/USD1 range at the end of 1998 and has generally traded in the Rp 8,000–10,000/USD1 range ever since, with fluctuations that are relatively predictable and gradual. However, the rupiah began devaluing past 11,000 in 2013, and as of November 2016 is around 13,000 USD.^[53]

Reform era[edit]

The Indonesian rupiah (IDR) banknotes denominations in circulation since 2016
Since an inflation target was introduced in 2000, the GDP deflator and the CPI have grown at an average annual pace of 10¾% and 9%, respectively, similar to the pace recorded in the two decades prior to the 1997 crisis, but well below the pace in the 1960s and 1970s.^[55] Inflation has also generally trended lower through the 2000s, with some of the fluctuations in inflation reflecting government policy initiatives such as the changes in fiscal subsidies in 2005 and 2008, which caused large temporary spikes in CPI growth.^[56]
In late 2004, Indonesia faced a 'mini-crisis' due to international oil prices rises and imports. The currency exchange rate reached Rp 12,000/USD1 before stabilizing. Under President Susilo Bambang Yudhoyono (SBY), the government was forced to cut its massive fuel subsidies, which were planned to cost $14 billion in October 2005.^[57] This led to a more than doubling in the price of consumer fuels, resulting in double-digit inflation. The situation had stabilized but the economy continued to struggle with inflation at 17% in late 2005. Economic outlook became more positive as the 2000s progressed. Growth accelerated to 5.1% in 2004 and reached 5.6% in 2005. Real per capita income has reached fiscal levels in 1996-1997. Growth was driven primarily by domestic consumption, which accounts for roughly three-fourths of Indonesia's gross domestic product (GDP). The Jakarta Stock Exchange was the best performing market in Asia in 2004, up by 42%. Problems that continue to put a drag on growth include low foreign investment levels, bureaucratic red tape, and widespread corruption which costs Rp. 51.4 trillion (US$5.6 billion) or approximately 1.4% of GDP annually.^{[citation needed]} However, there is a robust economic optimism due to the conclusion of the peaceful 2004 elections.
As of February 2007, the unemployment rate was 9.75%.^[58] Despite a slowing global economy, Indonesia's economic growth accelerated to a ten-year high of 6.3% in 2007. This growth rate was sufficient to reduce poverty from 17.8% to 16.6% based on the government's poverty line and reversed the recent trend towards jobless growth, with unemployment falling to 8.46% in February 2008.^[59][60] Unlike many of its more export-dependent neighbors, Indonesia has managed to skirt the recession helped by strong domestic demand (which makes up about two-thirds of the economy) and a government fiscal stimulus package of about 1.4% of GDP. After India and China, Indonesia was the third-fastest growing economy in the G20. With the $512 billion economy expanded 4.4% in the first quarter from a year earlier and last month, the IMF revised its 2009 Indonesia forecast to 3–4% from 2.5%. Indonesia enjoyed stronger fundamentals with the authorities implemented wide-ranging economic and financial reforms, including a rapid reduction in public and external debt, strengthening of corporate and banking sector balance sheets and reducing bank vulnerabilities through higher capitalization and better supervision.^[61]
In 2012, Indonesia's real GDP growth reached 6%, then it steadily decreased below 5% until 2015. After Joko Widodo succeeded SBY, the government took measures to ease regulations for foreign direct investments to stimulate the economy.^[62] Indonesia managed to increase their GDP growth slightly above 5% in 2016–2017.^[63] However, the government is currently still facing problems such as currency weakening, decreasing exports and stagnating consumer spending.^[64][65] The current unemployment rate for 2019 is at 5.3%.^[66]
Reform happened in Indonesia around the 1980s, when the Indonesian government states it will be attempting to economically integrate with global economies. They stated in 2017 - "Globalisation has made it difficult for the Indonesian economy to balance all other factors of the economy"