From Stability to Productivity: Indonesia's Path to 2045

There is one word highly favoured in Indonesian economic discourse: stability. We want a stable rupiah, controlled inflation, a credible state budget, and a sound banking system. Investors need confidence, and the capital market must not be easily shaken. All of this is important; a country that is not stable cannot move forward. But there is another word that must not be considered less important: productivity. Stability merely keeps the ship from rocking. It is productivity that makes the ship move faster, travel further, and become more valuable.

Indonesia today cannot merely survive. Indonesia must move up a class. The challenge is not only to keep the economy growing within a safe range, but to make that growth higher in quality—growth born from knowledge, technology, research, talent, innovation, and execution capability.

As a lecturer and researcher, I often see a recurring problem. Indonesia is very good at producing documents. We have roadmaps, grand designs, action plans, national strategies, policy briefs, and countless presentation materials. But the most important question is often left behind: what has actually changed on the ground? Have farmers become more productive? Have MSMEs moved up the value chain? Have logistics costs fallen? Has campus research entered the industry? Is national technology being purchased by state-owned enterprises? Are local governments making data-based decisions? Are university graduates ready to face the AI economy? If the answers are not convincing, it means our knowledge has not fully translated into productivity. It remains stuck as documents, seminars, certificates, or pilot projects. This is Indonesia’s major problem on the road to 2045.

In economic growth theory, the message is fundamentally simple. Robert Solow reminded us that while capital and labour are important, long-term growth is determined by technological progress and productivity. Paul Romer added that technology does not fall from the sky; it is born from conscious investment in knowledge—research, education, data, talent, laboratories, software, and institutions capable of learning. Joseph Schumpeter called innovation ‘creative destruction’. Innovation does not just add output; it transforms the economic structure, creating new industries, new ways of working, and new products, while forcing old methods to change.

Therefore, an ‘Advanced Indonesia 2045’ cannot be built solely on commodities, domestic consumption, and physical infrastructure. All of these are important, but they are not enough. Developed nations are built on the ability to turn knowledge into productivity. The world has already moved in this direction. Today’s global economic competition is no longer just about tariffs, exports, factory investments, or commodity prices. Major nations are racing in artificial intelligence, semiconductors, batteries, clean energy, biotechnology, data centres, research universities, and STEM talent. Technology companies worth trillions of dollars are not large merely because of their physical assets; they are large because they master knowledge, algorithms, data, talent, networks, and innovation ecosystems.

This is where Indonesia must honestly assess its position. We have a large market, vast natural resources, a demographic bonus, and digital economy potential. But potential does not automatically become competitiveness. Potential must be converted into productivity. If Indonesia merely becomes a technology market, we will be dependent. If we remain only a supplier of raw materials, the added value will go to other countries. If we are only consumers of AI, our data and economic behaviour will become fuel for the productivity of others.

Thus, the agenda for research, innovation, and higher education must be read as a national economic agenda. This is not solely a campus matter; it is a matter of growth, industry, employment, investment, competitiveness, and the future of Indonesia’s middle class. The World Bank offers an important framework for middle-income countries: investment, infusion, and innovation. A country does not merely need to attract investment; it must be able to absorb global technology and then create its own innovation.

For Indonesia, this framework needs to be expanded into a ‘5I’ model: Investment, Infusion, Innovation, Implementation, and Inclusion. Investment means capital must be genuinely productive, not just enlarging assets or exploiting natural resources. Infusion means Indonesia must be able to absorb technology, standards, management, and global best practices. Innovation means we must start creating our own solutions. Implementation means innovation must not stop at pilot projects, ceremonial applications, or final reports. Inclusion means the benefits of technology must be felt by workers, MSMEs, regions, students, lecturers, young researchers, and the wider community. Without implementation, innovation becomes a showcase. Without inclusion, innovation can give birth to new inequalities.

There are several practical agendas that need to be pursued immediately. First, make productivity the primary measure of economic transformation. Indonesia needs a simple but firm national productivity dashboard. We need to know which sectors are seeing productivity rise, which technologies are truly being adopted, which research is entering the industry, which regions have succeeded in lowering logistics costs, and which training programmes are increasing incomes. Second, connect research with real buyers. Much research stalls not because the ideas are bad, but because there is no initial market. State-owned enterprises, local governments, and public institutions can become early buyers of national technology through innovation procurement. The state should not only provide research grants but also create a first market for viable technology. Third, strengthen the capacity to absorb technology. Foreign investment does not automatically bring technology transfer. Without technicians, engineers, lecturers, researchers, production managers, local suppliers, and industry standards, the technology gap will persist.