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What we like and

we don’t like from


Disruptive
Innovations

M. Chatib Basri

Chairman of the Mandiri Institute

Jakarta, Sept, 26, 2017


Can we grow more than 6%? 2

 ICOR=6.2 (ratio Investment/GDP)


Current Account Goods
 1% GDP growth will require Investment/GDP 6.2% (USD billion) Services
Primary Income
8 Transfer
Current Account
 S=I
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 The Indonesia Gross Domestic Savings/GDP 34.5%


0
Sep-13 Sep-14 Sep-15 Sep-16
 Thus GDP Growth more or less 5-5.5% -4

 If Indonesia wants to achieve 6% GDP growth: -8

-12
 I/GDP should be 6%x6.2%=37.2 %

 S/GDP=35%  S-I= 2.7% (current account deficit).

 To get higher growth:

1. increase domestic savings (S)


2. lower ICOR (improve productivity and efficiency)
3. Attract FDI
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Total bankable unbanked
population

Source: Deloitte, 2015


Access for financing in Indonesia: 4

transaction cost and asymmetric


information

 Geographical condition (making transaction cost become very


high)

 Size of the country (making transaction cost become very high)

 Credit score (making monitoring cost become very high)

 Interest rate or access?

 Commercially viable
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Disruptive innovations
in general
 Reduce transaction cost

 Minimize asymmetric information

 Provide access, efficient

 Create new markets


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ROI and Market share: you 7

need to be no 1 or no 2

ROI

Market Share
Piketty, this is what has historically taken place, with the post WWII period an anomaly (Piketty,

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Inequality
2014). These trends have prompted some top search for new models of growth and distribution

(see Kanbur and Stiglitz, 2015).

Figure 10: Labor’s Share of Gross Domestic Income

Income gap :
1. Labour
and
capitalist

2. Very high
skilled and
unskilled
worker

Leipziger
If we disaggregate and Dodev,
real earnings 2016
and look at just manufacturing, we can see that the
according to the WEF, expected to be generated from smaller, generally high-skilled job families

Employment impact of
that will likely be dwarfed by job losses; moreover, the newly created jobs will require
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disruptive innovations
significantly different skills which put a challenge on existing education systems (see

Trajtenberg, 2016).

Net impact : -5.1 million jobs:


Source: WEF, 2016
+2 million jobs – 7.1 mliion jobs 18
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Some questions about the role of


government in the future?
 How fast can regulator catch up with innovations?

 Can government has an agile public policy?

 Can government has an agile fiscal policy?

 What government can do to mitigate the inequality: robot tax?


Training?
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Thank you