By H. W Dick
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2). Several features stand out. First, if the archipelago is broken into the three segments of West (Sumatra, Riau and West Kalimantan), Java, and East (South and East Kalimantan, Sulawesi, Maluku and Nusa Tenggara), it can be seen that most interisland trade was still between Java and the Outer Islands. Trade between West and East Indonesia was minimal. Second, Java now ran a huge export surplus with the Outer Islands, the outwards trade in foodstuffs and manufactures being almost three times the inwards trade in fuel and raw materials.
The differing resource endowments between Java and the Outer Islands were at last reflected in specialisation according to comparative advantage. 6 THE EMERGENCE OF A NATIONAL ECONOMY Destination of manufacturing sector output and origin of input by main island, 1987 (%) Intraisland Java output destination input origin Sumatra output destination input origin Kalimantan output destination input origin Interisland Foreign Total 80 64 15 13 6 23 100 100 65 64 21 20 14 16 100 100 25 74 36 11 39 15 100 100 apart from residual tariff and non-tariff barriers, Java was now the least-cost producer of many of these items.
In 1871 the first mail steamers to sail direct to Java through the Suez Canal closed the gap between the Netherlands and Java from around four months by sailing ship around the Cape of Good Hope to a timetable of 40 days by sea for passengers, mails and cargo (Brugmans 1950). The telegraph link opened in the same year reduced the transfer time for brief messages to an extraordinary 24 hours. That closure of economic distance led to a quickening inflow of Dutch capital into Java. The transfer of funds was facilitated by monetary reforms: the Netherlands guilder had been legal tender in Java since 1854 and after 1877 was tied to the international gold standard (Potting 1997).