Economic Transformation Towards a Developed and Prosperous Indonesia

Basically, economic transformation is a development process to shift a nation's economy from a heavy reliance on the exploitation of natural resources (primary sector) and cheap labor into a knowledge and innovation -- driven economy.  

This involves the reallocation of productive factors from traditional agriculture and fisheries sectors as well as extractive mining sector to envrironmentally friendly and modern agriculture, mining, manufacturing industry (secondary sector), and services (tertiary sector); and the realocation of those factors among industrial and service sector activities.  

If successful in accelerating economic growth, this process involves shifting resources from low- to high- productivity sectors.  More broadly, a high, inclusive and sustained economic growth is associated with the capacity to diversify domestic production structure: that is, to generate new economic activities (sectors), to strengthen economic linkages within the country, and to create national innovation capacities. 

The industrial and modern service sectors typically contribute dynamically to such a diversification procces.  Indeed, the evidence of the past quarter century -- or, indeed, of the post-war era in developing countries -- clearly indicates that rapid economic growth in those countries has been invariably associated with diversification of production into manufacturing and modern services, while slow growth has been usually associated with swelling low-productivity services (UN, 2008).           

As innovation is the foundation which drives a successful economic transformation,  Indonesia from now on must put more earnest endeavours to boost its innovation capacity.  It is noteworthy that innovation should be considered in a broad sense, as development of new economic activities or new ways of doing existing activities. 

In this regard it is important to recognize the role, not only of technological (e.g. new machineries, production technologies, living species, materials, and products) but also of non-technological innovations.

For example, developing new marketing networks and innovations in marketing, as well as the development of new organizational practices or structures are often more important than the adoption of new production technologies, materials, and products. Indeed, the ability to reap the benefits from new technologies frequently depends on innovations in distribution and organization taking place simultaneously. 

In 2019, a nation with the highest innovation capacity is Switzerland followed by Sweden, USA, Netherlands, and United Kingdom.  Indonesia was ranked number-85 from 129 countries surveyed by the WEF.  Within ASEAN region, the most innovative nation is Singapore (rank-8) followed by Malaysia (35), Vietnam (42), Thailand (43), Philippines (54), and Brunei Darussalam (71).  

In order to speed up the improvement of innovation capacity, we have to increase the quality (knowledge, expertise, skills, work ethics, and morality) of human resources through an integrated, comprehensive, and continuous improvement of health, education, and R & D sectors. 

Entrepreneurship and the number of entrepreneurs must also be harnessed and multiplied, from now 3 percent to at least 7 percent of the total population, as a minimum requirement to be a developed and prosperous nation (ILO, 2010).  

Furthermore, a mutual cooperation of pentahelix  (Academician/Scientist-Industry/Business-Government-Community-Media/Jurnalist) should also be strengthened.