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This paper attempts to analyze one important vehicle for Indonesia's economic development, namely the export sector, and st.irts from the observation that the relatively rapid growth of Indonesia's economy over the past few' years might have beer due to Indonesia's export expansion. It is this observation that this paper has subjected to quantitative analysis.Economic dualism is one of the salientfeatures of a developing society where modernity coexists with traditionalism. The history of dualistic development in Indonesit can be traced back to the colonial period. Following the investment spurt initiatd in the plantation sector, the so-called modem sector of the economy surged ahead while the traditional economy lagged behind. Such differential rates of growth of both sectors resulted in what is known as the differential structure. The development strategy towards "openness" was led by forces that gave rise to wage and salaried employment and which were pitted against traditional community self-employment force, in the rural, areas resulted in sustaining segmented or fragmented labor markets. After in dependence, a policy- aiming at restructuring the Indonesian economy through a progressive diminution of the traditional sector was carried out. The theoretical foundation of such a development model is based on the notion that segmentation will persitt until the Lewisian labor "surplus" is absorbed in modern employment. To carry out such policy the government has chosen the modern sector which consist mostly of medium and large scale enterprises to be the leading sector of the economy by providing, them with the necessary means. The economic protection given by the govemment to the modern sector ultimately resulted not in phasing out the dual structure but, on the contrary, in reinforcing the dichotomy between urban and rural labor markets and there by creating a new dualism, namely between the formal and informal sectors particularly in the urban areas.
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