Development of SMEs in the Indonesian Economy
AbstractThis paper examines the development of manufacturing SMEs (small- and medium-scale enterprises) in Indonesia during 1986-96, using unpublished data of BPS (Statistics Indonesia). The contribution of SMEs to total manufacturing value added has remained relatively small, but their contribution to the Indonesian economy in terms of employment generation is significant. The analysis suggests that, in broad terms, SMEs can coexist with LEs (large-scale enterprises), by producing a unit of output with less capital but more labour than LEs. Labour productivity in SMEs and LEs increased at a similar rate during the period under study. Increase in labour productivity of SMEs in the machinery industry was faster than in other main product sectors. SMEs in the machinery industry also increased their TFP markedly, compared with both SMEs in other sectors and LEs in the same sector. Overall, these results question whether subcontracting can support the development of SMEs and improve their performance.
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Bibliographic InfoPaper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2003-01.
Length: 36 pages
Date of creation: 2003
Date of revision:
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Indonesian manufacturing; small and medium scale enterprises; labour productivity;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-01-08 (All new papers)
- NEP-COM-2004-01-08 (Industrial Competition)
- NEP-ENT-2004-01-12 (Entrepreneurship)
- NEP-MAC-2004-01-08 (Macroeconomics)
- NEP-MFD-2004-01-08 (Microfinance)
- NEP-SEA-2004-01-08 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sato, Yuri, 2000. "How did the crisis affect small and medium-sized enterprises? -- from a field study of the metal-working industry in Java," The Developing Economies, Institute of Developing Economies, Japan External Trade Organization(JETRO), vol. 38(4), pages 572-595, December.
- Hayashi, Mitsuhiro, 2002. "The role of subcontracting in SME development in Indonesia:: Micro-level evidence from the metalworking and machinery industry," Journal of Asian Economics, Elsevier, vol. 13(1), pages 1-26.
- Haryo Aswicahyono, 2000. "How Not to Industrialise? Indonesia's Automotive Industry," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(1), pages 209-241.
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