The Implications of Economic Change in Indonesia for Social Class Formation

This article investigates the relationship between economic growth and changing class structures in Indonesia over the last century, with particular emphasis on the post-independence decades. Investigations carried out in the colonial era found that access to land and to government employment were crucial determinants of both income and social status. After 1950, these factors continued to be important, but in addition some studies also examined the growth of the private sector outside agriculture and its implications for changing social stratification among indigenous Indonesians. In recent times, contributions to the literature on the middle class have been made by international agencies (such as the Asian Development Bank and the World Bank). These studies have defined the middle class in terms of household income or expenditures and have argued that the middle class in Indonesia is growing and is now larger than the number of people living in poverty. The implications of this for future government policies are discussed.