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Baseline analysis of productivity changes with and without considering carbon dioxide emissions in the major manufacturing sector of Indonesia

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  • Erik Armundito
  • Shinji Kaneko

Abstract

This paper provides empirical evidence of changes in the productivities of manufacturing firms in Indonesia over time, in the form of total factor productivity (TFP), from 1990 to 2010 with and without considering carbon dioxide (CO 2 ) emissions. Employing cleaned and balanced panel datasets for four periods, 1990–1995, 1998–2000, 2003–2006, and 2008–2010, the analysis enables an evaluation of the impact of implemented policies or economic circumstances during each period. The Malmquist productivity index is employed to estimate TFP without CO 2 emissions over time, whereas the Malmquist-Luenberger productivity index is applied to estimate TFP with CO 2 emissions over time. Furthermore, the influence of energy factors on environmental productivity is also investigated. The results show that on average, TFP with CO 2 emissions over time has grown faster than TFP without CO 2 emissions, particularly for periods 1, 2, and 4. Technical progress is the basis of productivity growth after removing energy subsidies, and the change in environmental productivity is associated with the adjusted energy prices. Constructive policy designs can be derived from this paper that will enhance manufacturing sector performance after changes in the prices of oil commodities. Copyright Armundito and Kaneko. 2015

Suggested Citation

  • Erik Armundito & Shinji Kaneko, 2015. "Baseline analysis of productivity changes with and without considering carbon dioxide emissions in the major manufacturing sector of Indonesia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-24, December.
    • Handle: RePEc:spr:jecstr:v:4:y:2015:i:1:p:1-24:10.1186/s40008-015-0018-3
    DOI: 10.1186/s40008-015-0018-3
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    References listed on IDEAS

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    1. James D. Hamilton, 2009. "Causes and Consequences of the Oil Shock of 2007-08," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 215-283.
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    4. Erik Armundito & Shinji Kaneko, 2014. "Note on Data Cleaning and Panel Data Development of Indonesian Manufacturing Survey Data," IDEC DP2 Series 4-9, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
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    Cited by:

    1. Shunsuke Managi & George Halkos, 2015. "Production analysis in environmental, resource, and infrastructure evaluation," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-4, December.

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    More about this item

    Keywords

    Total factor productivity; Directional distance function; Malmquist-Luenberger productivity index; Manufacturing sector; C61; D24; O47;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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