TECHNICAL EFFICIENCY AND RETURN TO SCALE IN THE INDONESIA ECONOMY DURING THE NEW ORDER AND THE REFORMATION GOVERNMENTS
Muchdie, Muchdie
This paper analyses technical efficiency and return to scale in the Indonesia economy during the
year of 1967 to 2013. These range of years covering two eras of Indonesian government; the New
Order era that lasted between the year of 1966 to 1998 and the Reformation era during the year 1998
to 2014. The analysis was also based on the Indonesia economy’s business cycle those categorised
as Oil Booming Phase (1967-1981), Recession Phase (1982-1986), Deregulation Phase (1987-1996),
Multidimension Crisis Phase (1997-2001) and Economic Recovery Phase (2002-2013). Using data on
Gross Domestic Product based on constant price of the year 2000, capital stock with the same based
year and employment (1967-2013), Cobb-Douglas production functions were exercised to calculate
technical efficiency and return to scale employing regression analysis tehniques. The results shows
that technical effiency during the New Order Goverment were better than those during Reformation
Goverment. The results also showed that technical efficiencies vary among phases in the Indonesian
economy.
This paper analyses technical efficiency and return to scale in the Indonesia economy during the
year of 1967 to 2013. These range of years covering two eras of Indonesian government; the New
Order era that lasted between the year of 1966 to 1998 and the Reformation era during the year 1998
to 2014. The analysis was also based on the Indonesia economy’s business cycle those categorised
as Oil Booming Phase (1967-1981), Recession Phase (1982-1986), Deregulation Phase (1987-1996),
Multidimension Crisis Phase (1997-2001) and Economic Recovery Phase (2002-2013). Using data on
Gross Domestic Product based on constant price of the year 2000, capital stock with the same based
year and employment (1967-2013), Cobb-Douglas production functions were exercised to calculate
technical efficiency and return to scale employing regression analysis tehniques. The results shows
that technical effiency during the New Order Goverment were better than those during Reformation
Goverment. The results also showed that technical efficiencies vary among phases in the Indonesian
economy.
