The process of globalisation is best defined as a movement towards greater economic integration between countries through reduction in the barriers to free trade. The process of globalisation accelerated in the 1990a and 2000s due to the spread of new cost saving technology in transport and communications and the deregulation of financial markets. Indonesia is the largest economy of the South East Asia economic region, having the fourth largest and the 19th largest economy; it is an emerging economy that has increased international integration in recent decades.
Although Indonesia has a large economy, it also has a very large population, estimated around 237million people in 2010. Having low standard of living with a national income of $3600 per person, this makes Indonesia rank 147th in the world for income level. This classifies it as a low-middle income economy by the World Bank. Indonesia’s low level of income means that it suffers from a relatively high incidence of poverty, around 30% of the population lives on less than $US1.25 per day.
Indonesia suffers from low levels of economic development. According to the United Nations, Indonesia’s HDI of 0.734 is below 110 other economies. Income Inequality in Indonesia, as measured by its Gini index of 37.56, is similar to other economy in the region such as Malaysia and Vietnam. The distribution of income is more equal than in many countries, such as Thailand, the Philippines, or major economies such as China or the United States. This is part of the reason why Indonesia does better in international comparisons of economic development than it does in measures of income or economic growth.
In previous decades, Indonesia was considered a developing economy, and later, as a newly industrialised economy. Indonesia is now considered as an emerging economy because of its strong growth performance and prospect, growing