Growth Must Make Indonesia Better at Learning

At the Technology Innovation and Investment Forum 2026, economist César A. Hidalgo offered a useful way to think about economic growth: as a country’s ability to learn. Growth should not be measured only by investment, exports, or the number of factories built. Lasting progress depends on whether people and businesses can acquire knowledge, apply it productively, and use it to develop new products, technologies, and industries.

This perspective matters for Indonesia. Hidalgo’s presentation illustrated the relationship between income per capita and economic complexity, alongside a map of Indonesia’s exports. The map highlighted the country’s strengths in resource-based products, including nickel, stainless steel, ferroalloys, coal, and palm oil. Yet export data tell us what Indonesia sells; they do not, by themselves, reveal how much technological expertise, knowledge, and industrial capability has taken root within the country.

That distinction calls for a more critical assessment of economic development. Economic complexity can help policymakers understand a country’s production structure and identify opportunities to diversify. However, it should not become the sole measure of progress. Export rankings and product maps do not automatically capture job quality, domestic productivity, technology transfer, the distribution of economic opportunities, or the social and environmental consequences of industrial activity.

Downstream processing, for example, is a strategic step toward retaining more value within Indonesia. Its success, however, cannot be judged solely by the number of processing facilities built or the value of exports generated. We must also ask: Are Indonesian workers acquiring higher-level skills? Are local companies becoming capable suppliers? Are engineering, research, design, and technological expertise advancing? Is that knowledge spreading across industries, enabling Indonesia to produce new goods and services?

If progress on these fronts remains limited, downstream processing risks relocating production to Indonesia without building sufficient domestic capabilities. Industrial investment should do more than establish factories. It should create opportunities for workers to develop skills, domestic businesses to enter supply chains, universities to strengthen relevant education, research centres to solve industrial problems, and local suppliers to move up the value chain. Each project should help prepare Indonesia for the next stage of industrial development.

Hidalgo’s framework also reminds us that building new capabilities takes time. Countries cannot leap into every future industry at once. They need to identify the expertise and productive strengths they already possess, then connect them to achievable next steps. Indonesia’s capabilities in minerals, energy, agriculture, manufacturing, and the digital economy, combined with its large domestic market, can provide a foundation for more diverse and higher-value goods and services. Effective industrial policy should help businesses build on existing strengths and develop new capabilities progressively.

For me, the central lesson is not to chase an index, but to ask whether our development strategy is making Indonesia more capable. Government, businesses, universities, research institutions, and technology communities need to work together to ensure that investment translates into stronger skills, innovation, and productivity. The government can provide strategic direction and policy certainty; businesses can create opportunities for local workers and suppliers; and educational and research institutions can help solve practical technological challenges.

Indonesia has a large domestic market, valuable natural resources, and a strategic position in Southeast Asia and the Global South. These are significant advantages, but they do not guarantee progress on their own. Our economic strength will deepen when we turn these advantages into knowledge, technological expertise, competitive Indonesian companies, and higher-value jobs.

We should therefore judge growth not only by how quickly the economy expands, but also by how many new capabilities it creates and how widely its benefits are shared. Indonesia must grow by learning, ensuring that each stage of development opens the way to the next, strengthens our competitiveness, and improves people’s lives over the long term.