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Exports and Job Creation in Indonesia Before and After the Asian Financial Crisis

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  • Haryo Aswicahyono
  • Chris Manning

Abstract

Employment generation has been a challenge in Indonesia since the Asian Financial Crisis (AFC), especially in labor-intensive manufacturing. We examine the direct and indirect impact of exports on jobs, based on an analysis of input-output tables over the period 1985-2005, and compare these findings with the earlier pre-crisis period. The paper finds that fewer jobs were created through exports in manufacturing industries in after the AFC, because of slower growth in manufacturing exports and a shift away from light industry. However, there was an increase in service sector jobs, partly because of linkages with the main export industries in manufacturing and primary industry. Besides intensified competition from other lower-middle income Asian economies, the main constraints to job creation through exports appear to have been on the supply side; these include too poor infrastructure, an uncertain investment climate and tight labor regulations.

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File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2011/wp_econ_2011_11.pdf
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Bibliographic Info

Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2011-11.

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Length: 45 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:pas:papers:2011-11

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Keywords: exports; employment creation; manufacturing growth; input-output analysis; Indonesia; Southeast Asia;

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References

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  1. Hill,Hal, 2000. "The Indonesian Economy," Cambridge Books, Cambridge University Press, number 9780521663670.
  2. Aswicahyono, Haryo & Narjok, Dionisius, 2011. "Indonesian Industrialization," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Prema-chandra Athukorala, 2005. "Product Fragmentation and Trade Patterns in East Asia," Asian Economic Papers, MIT Press, vol. 4(3), pages 1-27, October.
  4. Manning,Chris, 1998. "Indonesian Labour in Transition," Cambridge Books, Cambridge University Press, number 9780521594127.
  5. Vivi Alatas & Lisa A. Cameron, 2008. "The Impact of Minimum Wages on Employment in a Low-Income Country: a Quasi-Natural Experiment in Indonesia," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(2), pages 201-223, January.
  6. Prema-chandra Athukorala & Bambang Santosa, 1997. "Gains from Indonesian Export Growth: Do Linkages Matter?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 33(2), pages 73-95.
  7. Prema-Chandra Athukorala, 2006. "Post-crisis export performance: The Indonesian experience in regional perspective," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(2), pages 177-211.
  8. Chris Manning & Kurnya Roesad, 2007. "The Manpower Law of 2003 and its implementing regulations: Genesis, key articles and potential impact," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 43(1), pages 59-86.
  9. Asep Suryahadi & Wenefrida Widyanti & Daniel Perwira & Sudarno Sumarto, 2003. "Minimum Wage Policy And Its Impact On Employment In The Urban Formal Sector," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(1), pages 29-50.
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