From ore to autonomy: an exploration of Indonesian resource nationalism, bargaining power, and nickel industry developmentalism

Abstract

This dissertation examines Indonesia’s shift from a resource liberal approach to a resource-nationalist stance in the nickel industry, focusing on the factors that enabled this transition. It not only understands the shift from a perspective of developmental economic strategy, but also interprets it from the political economy perspective of state-MNC bargaining power. The study evaluates three competing theoretical models for bargaining power — the Commodity Price Cycle Model (CPCM), the Obsolescing Bargaining Model (OBM), and the Great Power Competition Model (GPCM). Of these, the OBM emerges as the most relevant framework, demonstrating how bargaining power — arising from fixed asset investments, technological capacity building, and human capital development — enabled Indonesia to implement resource-nationalist policies. While this dissertation explores bargaining power as the direct determinant of the adoption of resource nationalism in Indonesian nickel, it also looks at Indonesia’s downstreaming developmental objectives in implementing its resource-nationalist economic strategy. Practically, it highlights the goals of moving up the value chain into producing more complex nickel derivatives, boosting export revenues, building domestic technological and human capacity, and generating assets and employment. Theoretically, this dissertation includes an extensive exploration of dependency theory, resource nationalism, state-MNC bargaining power, and its application to the Indonesian nickel industry. It links resource nationalism to dependency theory, showing how a developmental resource nationalism can be used to combat the condition of dependency. It uses the methodology of explanatory case study and process tracing, using varied data sources to provide a holistic exploration of the subject matter.