Abstract:

What would it take for Indonesia to reach the ‘next level’—the Upper-middle Income status—given challenge of natural resource ‘curse’ that it faces? Apart of many ways in which this question can be answered, this presentation would take human capital perspective and examines the urgency of the staggering youth unemployment in Indonesia and its subsequent education and training supply – labour market mismatch in Indonesia. This is very timely issue at this moment, as several reforms and new policies on education and innovation has been launched only recently. Two thesis are examined: Indonesia’s deep reliance on natural resources that elongates its risk on its long-term human capital growth and secondly, the broken linkages that permeate all layer of interventions of the currently shifting education, training and labour market policy horizon that overall, has impeded the nation’s process of innovation and technological upgrading that is required urgently so that Indonesia can ‘reverse’ the assumed natural resource ‘curse’ in the long run.

Breaking down Indonesia's National Innovation System and highlighting its cartilages, coordination between University/Industry/Government are examined. Other than redundancies of functions between ministries, this presentation would also pinpoint that the centrality of government in driving forward Research and Development activities in the country also gives detrimental effect on non-governmental research activities—especially when the proclaimed current national program on building innovative enterpreneurial society. From case studies and interviews, it is found that recurring hierarchical arrogance between institutions often impeds knowledge sharing and idea creation build up process.

Having observed contemporary masterplans and policy guidelines that largely aims at inducing growth of enterpreneurial society in Indonesia, focus and approach that the state uses in the current national master plan does not necessarily reflect on the ad hoc and autonomous spirit of entrepreneurship and innovation itself. Examples of such incoherencies are reflected not just in national master plan of education but also in the national working competence standardization process. As an instance of cases studied, education in Indonesia is far from accommodating its own economic plan on becoming enterpreneurial society. Burdened with rote-learning methods, students are deprived from self learning capacity that is essential in inducing creativity and enterpreneurial spirit. Thus, while Indonesia is faring relatively well in scientific measures (e.g numbers of new inventions), efforts of streaming commercialization of innovation results is lagging much behind. For this issue, more effort and resources should be aimed at building Intermediations bridging top notch scientists on the one hand and top notch entrepreneurs on the other hand instead of expecting to breed new top-notch scientists that can act as good enterpreneurs at the same time—as is the case in Indonesia at this moment.

Transcending current policy intervention that seems to be confined to ‘business-side’ and ‘job-creation’ aspect of entrepreneurship, this presentation shows a case of a Middle Income Trapped country, where recurring systemic offset of objective across implementation plan has obscured sustainability and distributive aspect of the intended education and innovation policy impact in the long run.

Keywords:

Human capitalization, Indonesia, education, skills development, training, unemployment, middle-income country trap, natural resources curse, technology upgrading.