East Timor had been a colony of Portugal for more than four centuries when Indonesia invaded it in 1975 and began its occupation of twenty-four years. Indonesia imposed its strategy of economic development, pembangunan, with the primary objective of 'modernising' this newly occupied territory which was regarded as daerah ketinggalan (a 'backward' region) - a legacy of Portuguese colonialism. According to the Indonesian perspective, East Timor would, in the end, become daerah maju (a 'developed' region) like the twenty-six other provinces in Indonesia. In order to 'modernise' the economy and society, Jakarta transferred approximately US$1 billion into East Timor during the occupation period. Much was achieved in terms of physical infrastructure such as roads and buildings. Real GDP growth rate in East Timor averaged 5.6% during the 1983-1996 p~riod. This was above the Indonesian average over the same period. This growth wa~ not without cost, however, as human suffering also increased. For purposes of companson, East Timor was the lowest in terms of the human development index (HDI) in Asia, and identical to that of the Central African state of Rwanda. The main objective of this study is therefore to analyse the New Order's strategy of economic development by critically assessing the processes and outcome of development brought to bear upon the East Timorese economy and society. Since the Indonesian development strategy was imposed upon the East Timorese, its character could not be anything other than authoritarian. The thirteen-year 'closure' period (1976- 1989) turned East Timor into a cauldron of increasing terror and suffering. However, it also encouraged rent-seeking activities and enlarged potential monopoly .rents, which ended up in the pockets of some military groups and a few East Timorese 'loyalists'. One of the major problems faced in conducting this study was to find reliable information; and unfortunately this problem also characterises our current knowledge of the East Timorese society and economy. Indeed, East Timor has become a major focus of attention for specialists in international relations, as well as social scientists, particularly after the Santa Cruz massacre in 1991. Yet, little has been written on the impact of Indonesian development strategy upon the East Timorese economy and society. This lack remains to the present day - to which this study contributes. Consequently, this study utilises data from a household survey that was conducted in Liquica, the smallest district in East Timor and one of the coffee-producing areas. To the author's knowledge, this survey breaks new ground in trying to generate data on the rural household, as well as in trying to understand poverty and inequality at the household level, which despite its limited sa.mple, might also shed light on the issues facing by other households across East Timo:. GIven the nature of the present study, an interdisciplinary approach is adopted. The thesis consists of two parts. The first part consists of three chapters: the introduction, a theoretical analysis and an overview of East Timor's colonial history. The second part, t~e main body of the study, consists of four chapters: pembangunan in Indonesia's recent history, the impact of pembangunan on East Timor's economy, human development and examination of the findings of the household survey.