Downstreaming as a Growth Strategy

Prof. Ricardo Hausmann, a Director at Growth Lab at Harvard, recently visited Indonesia and discussed how downstreaming should be conducted. One of his key points was that Indonesia must carefully execute its downstreaming strategy, as increasing dependence on natural resources could divert the country from exploring other growth opportunities.

In response to this, Mandala has developed a study adopting Hausmann’s framework, emphasizing that downstreaming can be a key strategy for Indonesia to achieve Vision 2045—breaking free from the resource curse, optimizing the demographic dividend, and transitioning into an advanced economy.

Beyond economic transformation, this study highlights that downstreaming must be more inclusive, considering the quality of human capital, driven by clear goals, and executed carefully to maximize long-term benefits. Policy direction must also focus on workforce development through public-private partnerships, enhanced institutional coordination, and increased investment in innovation. Beyond raw materials, Indonesia should leverage its existing expertise to ensure a more sustainable and inclusive industrialization strategy.

This study was presented at Mandala Talks in July 2024, under the theme:
"Taking Downstreaming to the Next Level: A Diagnostic Analysis for Indonesia’s Higher Complexity and Beyond."
The session featured distinguished speakers, including Pak Chatib Basri, Pak Septian Hario Seto, Pak Mohamad Faizal, and Pak Iwan Salim.