Economic Growth at What Cost?

Posted in: India, Indonesia, Inequality, peer to peer

Guest Blogger Nesar Ahmad from People’s Budget Initiative (PBI) India reflects on his recent trip to Indonesia


The economy must grow and fast, so that the size of the pie increases and there is a bigger share for everyone.

These were the opening remarks of the then Deputy Finance Minister of Indonesia said this (paraphrased) at the conference on “Redemocratisation of Economic, Social and Political for Inclusive Development” organized by INFID, a national network of Indonesian NGOs.

I was not quite surprised to hear that. Politicians all over the world seem to be thinking alike. They want faster and stable economic growth at any cost. We hear similar views in India. The emphasis on growth is almost universal today. The Minister also praised the Indonesian government’s policies which could achieve the sustained and continuous economic growth.

But as the conference advanced, the issues of people’s everyday lives emerged more clearly and that economic growth alone was not the answer. The concerns raised during the conference were in contrast to the perception I had by looking at the thousands of tall buildings, the wide roads full or cars and other vehicles, thriving night clubs and bars and big hotels in the capital city of Jakarta, and later in Bandung. The conference focused on social and gender inequality, the growing threat of extremism, access to health, education and water, threat faced by Papua indigenous population, all of which require more efforts than just economic growth and, worse, sometimes are the result of the very same economic growth the politicians and industry leaders all over the world want to speed up.

The minister also pointed out the fuel subsidy which in his views was responsible for increasing inequality. However, as the speaker from Papua narrated the issues of indigenous land grabbing, loss of commons like forest and waters, the displacement caused by mining are all at the heart of the exploitation of the natural resources and disregard for the people’s right in the pursuit of the growth. This reminded me of the people’s land being snatched for various development projects all over India, especially in the tribal heartland.

The government in Indonesia was going to change in a week time. People had already elected their new president who was to assume office in the coming week. The same week the president elect figured on the Times cover, I was told that growing inequality in Indonesia was one of the issues on which the presidential election was fought.

In fact, the people, organizations, and activists I met all mentioned that inequality in Indonesia has only increased with recent economic growth. By the interaction with Yudha, our excellent guide in Indonesia, and Roy from Oxfam in Indonesia, I came to know of how the small farmers in the countryside were lured into giving their land to the large palm oil companies and becoming workers on their own lands.

In a later meeting held in the office of Prakarsa, a research and advocacy organization in Jakarta working on the issues of inequality and tax justice among many others, we discussed tax evasion and illicit financial flows and what came up was some of the palm oil companies are involved in tax evasions as well. The issue of tax evasion and illicit financial flow through the tax heavens is something which I could relate with easily as the civil society and budget organizations in India have also been grappling to understand and tackle this issue in more effective ways.

Before the meeting at Prakarsa, we visited office of the SMERU, a research Institute, where we came across academic presentations on how inequality affects the very growth (which has become the obsession of our leaders) negatively. For example, inequality in quality and access to education worsens unemployment. Also, and more importantly, inequality may give rise to violence and social instability.

The next day in Bandung we visited the Centre for Economic and Development Studies (CEDS) in the University of Padjadjaran, where the director of the centre shared his views on the inequalities – economic and opportunity – in Indonesia and its impact. We came to know that about half of the Indonesian population lives on less than 2 US$ a day. The Indonesian economy has seen high growth in recent years but the growth has been mostly in service sector and not in manufacturing. Growth has been able to check poverty in some districts but some of the cities have also seen rise in poverty levels. The high inequality in the country is not only in people’s income but also in health and education, which he termed as inequality of opportunities that in turn impacts growth negatively.

On the wall behind me in the hall, where the meeting was taking place, was a big picture of Indian Noble laureate Prof. Amartya Sen, who keeps India and world reminding of not ignoring the human development in pursuits of economic growth. The discussion which followed the director’s presentation highlighted the similarities of the issues the people in the developing countries are grappling with. I made some points about similar issues in India and friends from South Africa shared their experiences.

Poster of Prof. Amartya Sen at CESD

For Nesar blog


Our next destination was Akatiga, an organization focusing on the rights of workers. The organization supports the unions and organizations struggling to ensure minimum wages to the workers in the informal sector, where more than 70% of the workers are employed. Akatiga is also focusing on free labour movement among the ASEAN countries, on which they agreed in 2007 and it is now being slowly implemented.

Back in Jakarta, we met the leader of Indonesian Peasant Union who described to us the long history of peasant movement and formation of the Federation of Indonesian Peasant Union and their present struggle. The Indonesian Peasant Union is a member of international peasant campaign – La Via Campesina. From him, we learnt about the struggle of farmers in Indonesia, the problems they face because of WTO agreements which are so common to India as well. The issues of food security and agriculture sovereignty are integrally related. It was being expected that the government would rename the Agriculture Ministry as Ministry of Agriculture and Food Security, which it seems has not happened yet.

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Meeting with Mr. Henry Saragih, Secretary General of Indonesian Peasant Union

Next day in INFID’s office, their director shared how INFID as a network of civil society organizations is taking up these issues nationally and also internationally. The key to INFID’s strategy is to make collaborative efforts with other NGOs as well as academic and research organizations, unions and farmers leaders. This collaborative effort of civil society organizations helped position poverty and inequality as one of the major political issues in the last general election in the country. As a result, there’s a hope that the new president will take up these issues.

It is important for the civil society to collaborate and make united efforts to be successful. The coalition and networks of various organizations collaborating with expert organizations and individuals whose views are valued by the governments are more likely to influence and get their demands across. But the bigger issue is making alternative views and ideas more acceptable. The view that economic growth and economic growth alone is remedy of the every problem we are facing in the society is to be contested and alternative views are to be presented more convincingly. This is the bigger challenge.

In Bandung we visited the Bandung museum, a place where the famous Bandung Conference took place in 1955, which became a milestone in Non-Aligned movement; great leaders of the developing countries of today met there and decided to adopt policy of Non-alignment and maintain equidistance from the both sides of the cold war. Some of these countries have obviously traveled a long distance and have now become economic powers of the world as members of G-20 and BRICS.  BRICS are now going to set up their own development bank, like the World Bank, the Asian Development Bank, African Development Bank etc.

However, the one question which these countries must ask is: are they going to have an alternative development path which will make people and environment as the focus of their development or are they going to follow the growth oriented development paradigm which creates poverty, increases inequality, displaces people and damages environment, increases global warming and changes the climate? As global players, they must remember this famous quote by American environmentalist Edward Paul Abbey:

“Growth for the sake of growth is ideology of the cancer cells.”

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