Development in most Asian countries has taken place through several conventional phases. Economies such as Indonesia have started with agriculture/resource based development; have moved to industrialisation first based on import substitution and then shifting towards export orientation as well as production networks; and have then started to transition towards a knowledge and information based as well as a more services oriented economy. The ‘new economy’ continues to evolve beyond knowledge and information based sectors; the fourth wave of change is known as the creative economy.

At the same time developing countries are facing external and globalisation challenges. Technology disruptions have led to greater interdependence and changing models of international business engagement. Just what can be transacted and exchanged between countries in today’s context is so vastly different from the situation just a decade ago.

How has a country like Indonesia developed over the course of these different phases of development? Has it been able to take advantage of the new economy? What are the important challenges, opportunities and policies ahead?

Dr Mari Elka Pangestu was the Minister of Trade of Indonesia from October 2004 to October 2011. She was appointed to the newly-created position of minister of Tourism and Creative Economy in October 2011. Dr Pangestu is currently Professor of International Economics at the University of Indonesia.

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