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Exports and Innovation in Indonesian Manufacturing

Author

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  • Ari Kuncoro

    (Faculty of Economics, University of Indonesia)

Abstract

In this paper we examine the bi-directional relationship between globalization and innovation in Indonesia’s manufacturing sector. The lack of innovation data in the manufacturing survey has necessitated the use of R&D expenditure as an input in the innovation production function. The focus of this study is whether exporting firms do learn from their activities in export markets or firms have to be innovative first, that is, doing R&D before they can go into foreign markets. We find firms have to do R&D first to become competitive in foreign markets. The reverse causality of whether export activities encourage firms to innovations or R&D, though significant, is statistically much weaker. But this does not preclude the possibility that the relationship between exports and R&D activities in Indonesian manufacturing is indeed bi-directional

Suggested Citation

  • Ari Kuncoro, 2011. "Exports and Innovation in Indonesian Manufacturing," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 59, pages 71-92, April.
    • Handle: RePEc:lpe:efijnl:201104
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    More about this item

    Keywords

    Indonesian manufacturing; Research and Development;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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