FDI and the Dynamics of Productivity in Indonesian Manufacturing

Authors: Yumiko Okamoto; Fredrik Sjöholm

Source: Journal of Development Studies, Volume 41, Number 1, January 2005 , pp. 160-182(23)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

This article examines productivity growth in the Indonesian manufacturing sector. We use a longitudinal data set to calculate the effects on aggregate manufacturing productivity growth from improvements within establishments, from reallocation of market shares, and from the turnover of plants. Productivity growth is mainly explained by reallocation of market shares and from turnover of plants. Moreover, the foreign contribution to productivity growth is unclear and depends on the choice of productivity measure. A cautious conclusion is that the foreign contribution is about the same size as the foreign share of manufacturing output. Finally, there is a difference in the causes of productivity growth between foreign and domestic plants.

Document Type: Research article

DOI: http://dx.doi.org/10.1080/0022038042000276608

Publication date: 2005-01-01