The Settlement of Decolonization and Post-Colonial Economic Development

Despite impressive growth in the early twenty-first century, Indonesia’s economic performance in the post-colonial era lagged behind that of its neighbours in Malaysia and Singapore. The different development paths chosen, particularly in the treatment of foreign (and, especially, ex-colonial) investment, were central to this—Indonesia’s rejection of Western capital in the 1950s and 1960s, and continued suspicion of foreign economic influence in the 1970s, contrasted with the more open approach of Malaysia and Singapore. How the post-colonial foreign presence was dealt with was largely conditioned by how decolonization was settled—the restrictive agreements reached between Indonesia and the Netherlands, and ongoing Dutch occupation of Irian Jaya, were sources of widespread resentment, and differed significantly from the more liberal approach of the British towards Malaysian and Singaporean independence. The short-term settlement of decolonization was therefore of greater significance than the longer-term nature of colonial rule in determining post-colonial economic patterns.