Questioning the Concept of Economic Growth
The BPS report stating that Indonesia’s economic growth in the first quarter reached 5.61 per cent and is the highest in the last 13 years has sparked pro and contra debates among the public.
Some economists argue that this growth figure does not yet reflect the real conditions of society, as it is not supported by investment and increased productive economic activities among the people.
They state that the existing economic growth is only enjoyed by a handful of groups that control capital and technology. Moreover, several fundamental economic problems have not been adequately addressed by the government, such as the still very large foreign debt, and the open unemployment rate, which is considered still high at 7.24 million people as of February 2026, although over the past year this figure has decreased by 35,000 people due to the absorption of the workforce reaching 1.89 million people.
At the very least, there are three basic growth concepts that need to be discussed by the stakeholders of this nation. Namely, classical growth, growth with equity, and growth through equity.
This is not a matter of wordplay, but has a deep philosophical meaning in the context of economic development. In the perspective of Islamic economics, if ranked based on the aspect of development impact on justice and economic welfare, the most ideal concept is growth through equity. Let us dissect them one by one.
First, in the classical growth concept, the main orientation is on increasing GDP (Gross Domestic Product), namely how GDP can be accelerated and increased every year with a certain percentage target.
In reality, there is often a trade-off between growth and equity, where the growth figure rises sharply, but at the same time, inequality also increases significantly.
This occurs due to the failure of the trickle-down effect mechanism, which provides privileges and various incentives to large industries to support the national economy, but is not balanced by sharing mechanisms and greater access to the general public.
As a result, wealth is concentrated only in the hands of a few groups, and often the top 1 per cent of the population enjoys the largest share of the economic pie.
Growth without equity will create vulnerability to social unrest and political instability. This is like building a skyscraper on shaky foundations.
Second, in the growth with equity concept, in addition to making growth the main engine, the government also intervenes through aggressive redistribution policies, such as progressive taxes and social assistance, so that the results of economic growth can be enjoyed more evenly.
Nevertheless, the problem is that the poor are often only made objects of assistance (hands below), and not as active players in the economy.
The purchasing power of the people is maintained to stabilise the consumption level, because it is the variable that contributes the most to GDP. This means that what is maintained is the demand side of the economy. Once entering the supply side, those who remain in control are the capital holders. This is the weak side of this concept that often occurs in the reality of a nation’s economy.