How has the structure of Indonesia’s GDP changed over the years?
GDP composition
GDP can be determined in three ways, all of which should, in principle, give the same result. They are the production (or output) approach, the income approach, and the expenditure approach. The expenditure approach is summarized in the formula: GDP = C (private consumption) + I (Investment) + G (public consumption) + X (export of goods and services) – M (import of goods and services).
The production approach measures the market value of all final goods and services calculated during the period. It sums up value add of each production process to avoid double counting. The value-added shares presented in the World Development Indicators for agriculture, industry, and services may not always add up to a hundred percent due to FISIM and net indirect taxes.
Indonesia’s GDP composition
Indonesia’s economy is traditionally domestic-based, relying more on domestic demand (C and I). After the 1997 crisis, it started to rely more on export (X) as a way to boost the economy. However, over the past ten years, there has been a gradual shift back to the traditional structure, with export (X) proportion in the GDP decreasing and Investment’s increasing. On the production side, the industrialization of the economy began in the 1960s. Industry overtook Service as the largest sector in the 90s, but Service took it back since 2014.
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