Leslie Hook, Harry Dempsey and Ciara Nugent report that Indonesia seeks to profit from producing nickel, a key ingredient in electric car batteries (“The new commodity superpowers”, The Big Read, August 9). The authors also note that nickel prices have fallen recently.
When crude oil prices increased almost 10 times between 1973 and 1981, Indonesia’s energy exports increased more than 14 times. The resulting revenues were invested in irrigation, fertiliser and farm-to-market roads. This raised agricultural productivity. Indonesia was thus spared the so-called Dutch disease that afflicted other resource exporters such as Nigeria. It also weathered the collapse in oil prices between 1981 and 1986.
Indonesia should use the present windfall from the commodity industry to invest in healthcare and education for the young. The World Bank’s Human Capital Project reported that 27.7 per cent of children in Indonesia suffered from stunting in 2019. Better nutrition and healthcare would help these children to grow. In addition, the World Bank found that 10-year-olds in Indonesia lost almost a year of academic skills due to the Covid-19 pandemic. Increasing school hours, providing remedial training, improving internet access and increasing parental involvement could help these students to catch up.
Investing in children’s health and education would not only benefit the children. It would also provide future workers with the requisite human capital to attract foreign direct investment, master foreign technologies and engage in non-commodity manufacturing. This would provide Indonesia with a second engine of growth when commodity prices fall.
August 11, 2023 Financial Times
