The Implication of Middle Income Trap Towards Economic Growth and Fiscal Policy in Indonesia

DOI

10.2991/978-94-6463-994-0_2How to use a DOI?

Keywords

Middle Income Trap; Economic Growth; Fiscal Policy

Abstract

This reseach aims to explore the implication of middle income trap on Indonesia’s economic growth and fiscal policy between 2014 till 2024 period, where economic growth tends to stagnate at around 5 percent per year outside the pandemic. The data’s based on qualitative content analysis by using literature and secondary data. In 2024, Indonesia’s economic growth was recorded at 5.03 percent, slightly slower than in 2023 which reached 5.05 percent, and still below the government’s target of 5.2 percent. This stagnation indicates a real risk of Middle Income Trap, characterized by slowing growth in the manufacturing sector, household consumption, and exports. To overcome MIT (Middle Income Trap) in addition to spurring economic growth, fiscal policy also plays an important role, especially through optimizing the allocation, distribution, and stabilization functions in the State Budget (APBN), increasing human capital, productive investment, economic diversification, and developing the service sector and technology-based industries. To outside MIT phenomenon, Indonesia needs to focus on increasing human capital, productive investment, economic diversification, and developing the service sector and technology-based industries. This strategy will encourage an inclusive and sustainable fiscal policy direction.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Afrizawati Afrizawati
AU  - Azwardi Azwardi
AU  - Sukanto Sukanto
AU  - Siti Rohima
PY  - 2026
DA  - 2026/02/23
TI  - The Implication of Middle Income Trap Towards Economic Growth and Fiscal Policy in Indonesia
BT  - Proceedings of the 24th Malaysia-Indonesia International Conference on Economics, Management, and Accounting (The 24th MIICEMA) in conjunction with The 9th Sriwijaya Economics, Accounting, and Business Conference (The 9th SEABC) (MIICEMA-SEABC 2025)
PB  - Atlantis Press
SP  - 4
EP  - 16
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-994-0_2
DO  - 10.2991/978-94-6463-994-0_2
ID  - Afrizawati2026
ER  -