[A] large diverse population, in a post-colonial state, tends to be a recipe for dysfunction. As Alesina et al. (2006) showed, European empires often created "artificial" states by lumping a bunch of ethnic groups together within fairly arbitrary borders, and this practice tended to lead to a bunch of ethnic conflict that made it hard for these countries to grow (at least, for a while). Indonesia somewhat fits this bill -- much of it used to be part of various Javanese empires (Java being the most populous island in the archipelago), but the modern state is a creation of Dutch colonialists.

As one might expect from this history, the country has often been riven by ethnic conflict, and there's still some of this today. The most severe right now is the Papua Conflict, a low-level civil war between the government and a separatist movement.

Indonesia's post-colonial history is violent and turbulent. In the 1960s the army, with support from the U.S. CIA, committed a mass slaughter of half a million suspected communists. In 1998 there was a huge series of riots against ethnic Chinese people, which ended up toppling the country's dictator at the time.

Given its natural challenges and this bloody and chaotic history, it's all the more remarkable that Indonesia is now one of the freest and most democratic in its region, with a higher Freedom House ranking than Malaysia, the Philippines, or Singapore. Since the fall of the dictator Suharto in 1998, the country has had four peaceful transitions of power (though one of these was an impeachment of a president who tried to dissolve the parliament). Minority rights have improved over time. Though the country is about 87% Muslim, and did have a bit of Islamist terrorism for a while, this has mostly faded in recent years, and the country is generally looked upon as a model for peaceful Islam.

Increasing stability and freedom is always impressive, but at a time when global authoritarianism and intolerance are gaining strength, it's all the more so. In a world growing steadily darker, Indonesia has bucked the trend. And there's some evidence that Indonesia's move toward democracy has been good for its economic growth.

But what's also impressive about Indonesia is that it has maintained long-term economic growth while switching its basic development model -- and now may be about to switch models a second time.

The first thing I do when trying to figure out a country's development model is to go to the Atlas of Economic Complexity and look at its exports -- basically, a measure of what the country specializes in. Roughly speaking, there are two types of developing countries -- natural resource exporters and industrial exporters. The former typically have all kinds of problems -- political dysfunction, overvalued currency, vulnerability to resource price swings, and so on. This is known as the Resource Curse. The industrial exporters generally start out poorer, since they don't have much to sell. But as long as they maintain the right policies they tend to experience steadier growth; eventually, they usually end up richer than the resource exporters.