GREAT Institute: Development Inequality Needs to be Answered with a State-Driven Economy

Director of Geopolitics GREAT Institute, Dr. Teguh Santosa, in the Development Communication Internship activity organized by Nexus Digital Strategy in Pontianak, West Kalimantan, Saturday, June 6. (IST)

PONTIANAK - The inequality of development and low national productivity are considered to be one of the weaknesses of economic approaches that are too dependent on market mechanisms. Therefore, a more active role for the state in directing development is considered necessary to strengthen the foundations of the Indonesian economy.

This view was conveyed by the Director of Geopolitics of the GREAT Institute, Dr. Teguh Santosa, in the Development Communication Internship activity organized by Nexus Digital Strategy in Pontianak, West Kalimantan, Saturday, June 6. The activity was attended by dozens of young content creators from various regions in West Kalimantan.

According to Teguh, the issue of development inequality has long been a concern of President Prabowo Subianto and has become one of the important themes in the book "Development Paradox" published in 2017.

Therefore, the Prabowo government is now trying to complement the market-driven economy approach with the state-driven economy approach, namely the more active role of the state in encouraging strategic sectors that are considered important for national interests.

The policy, continued Teguh, can be seen from the industrial downstream program, the control of the export of certain commodities, to state intervention in sectors directly related to community needs, such as education, the nutritional fulfillment of the younger generation, as well as the strengthening of village and neighborhood economies.

"Market-controlled economic practices encourage efficiency, innovation, and investment. But the market is not always willing to enter the upstream sector, food, energy, mineral downstream, or the development of connectivity in the 3TP region," said Teguh, who is also a lecturer at UIN Syarif Hidayatullah Jakarta.

The 3TP area includes the leading, lagging, backward, and border areas that have been facing the challenge of limited investment and infrastructure.

Teguh explained that the approach which he called a state-driven economy can also be understood as strategic state intervention. In practice, the state takes the role of an initial investor as well as a risk taker in sectors that have not been considered attractive by the market.

The goal is to build the foundation of a national industry, strengthen food and energy security, and increase the logistics capacity needed for long-term growth.

From a geopolitical perspective, Teguh assessed that the approach was also part of efforts to strengthen Indonesia's bargaining position amid the competition of major world powers.

According to Teguh, who is also the Chairman of the Indonesian Cyber Media Network (JMSI), Indonesia wants to appear as a country with adequate economic capacity so that it is not only a market, but also able to participate in influencing important agendas in global arrangements.

"This is not a situation where the country is facing the market. A smart country and a healthy market are the formula for Indonesia to have adequate resilience," said Teguh.

He assessed that the balance between the role of the state and the market mechanism is the key to ensuring that economic growth is not only high, but also able to reduce inequality and strengthen national independence.