Our Resources, Our Rules: A Political Economy of Resource Nationalism in Indonesia
Date
2018
Authors
Warburton, Eve
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Abstract
Indonesia is a major exporter of the world’s mineral and
agro-commodities. During the global commodity boom, which took
place roughly from 2003 to 2013, Indonesia’s resource sectors
were subject to new nationalist agitation and intervention. The
government placed limits on foreign investment, and restricted
raw commodity exports. These policies, therefore, disrupted
global markets and angered foreign companies and trading
partners. Nationalist intervention was remarkably aggressive in
some sectors, such as mineral mining; in others, however, like
the booming palm oil sector, nationalist policy proposals failed.
What explains this nationalist variation?
Conventional market-cycle theories suggest resource nationalism
rises and falls in tandem with commodity prices. However,
external shocks cannot explain the varied policy responses we
find throughout resource-rich countries, and across their
resource sectors. Nor can market-centred theories explain why
nationalist interventions sometimes persist long after a boom has
ended. Variation tells us that nationalism is contingent - but
contingent upon what exactly? What are the mechanisms that lead
from a price boom to very different nationalist outcomes? What
makes some resources more vulnerable to nationalist mobilisation
than others? Why do states behave differently in different
sectors?
To answer these questions, this thesis brings recent comparative
work on resource nationalism into conversation with classic
political economy scholarship on business, politics and economic
policymaking. It refocuses the analytical lens upon sector-level
variation, holding state-level conditions constant, and offering
a structured comparison of varied nationalist outcomes in
Indonesia’s mining, commercial plantations, and oil and gas
sectors.
The principal contention of this thesis is that nationalist
variation was a function of the preferences and capabilities of
prevailing domestic business interests. While nationalist policy
networks in each sector included a range of actors from the
bureaucracy, private sector and civil society, those networks
prevailed when they enjoyed support from an expanded and
materially-powerful class of domestic resource companies. The
subsidiary contention is that business’s policy preferences and
capabilities were conditioned by each sector’s unique
structural conditions – such as dependence upon and integration
with foreign capital, levels of business internationalisation,
contribution to state revenue and developmental goals, and each
commodity’s centrality to broader nationalist narratives. In
other words, variation was contingent on structural conditions in
each sector that gave rise to, and enabled, effective nationalist
policy networks.
This study is motivated by an empirical puzzle about nationalist
outcomes in Indonesia, and aims first for internal validity over
generalisability. However, it also explores the portability of
these claims beyond the Indonesian case. Specifically, this
thesis proposes a new model for explaining cross-sector variation
which foregrounds a causal role for the preferences of lead firms
and their levels of internationalisation. It offers a preliminary
test of the model’s explanatory power by introducing Brazil as
a second country case study.
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Indonesia, natural resources, nationalism, business-state relations, political economy, comparative politics
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Thesis (PhD)
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