Economic Development and Trade Liberalization: The Indonesian Experience

From 1950 to 1965, Indonesia followed an import substitution industrialization development strategy. From 1966 to the present, Indonesia has moved toward an export oriented development strategy. This paper tests the predictions of the Heckscher-Ohlin- Samuelson (HOS) model of international trade by comparing Indonesia\u27s economic performance under two contrasting development strategies. The paper concludes that Indonesia\u27s economic performance under the opposing development strategies supports the predictions of the HOS model. Furthermore, the Indonesian experience under the two development strategies supports the trade as an engine of growth hypothesis