IDEAS home Printed from https://ideas.repec.org/a/taf/bindes/v41y2005i2p221-242.html
   My bibliography  Save this article

Multinational presence and labour productivity differentials in Indonesian manufacturing, 1975-2001

Author

Listed:
  • Sadayuki Takii
  • Eric Ramstetter

Abstract

Foreign multinational corporations (MNCs) have accounted for important shares of employment and production in Indonesian manufacturing since 1975, and these shares increased especially rapidly in the early to mid-1990s. These increases were concentrated in the machinery industries and in MNCs with large foreign ownership shares, and continued through the crisis of 1997-98 and beyond, despite apparently large withdrawals of inward foreign direct investment in 1998 and subsequent years. MNCs generally had much higher average labour productivity than local plants and, after controlling for plant-level variation in electricity consumption per employee, size and vintage, we found that these differentials persisted in about three-quarters of the cases examined. However, there was also large variation in MNC presence and in MNC-local productivity differentials across industries and time, with statistically insignificant differentials most common in apparel and footwear, as well as in MNCs with small foreign-ownership shares.

Suggested Citation

  • Sadayuki Takii & Eric Ramstetter, 2005. "Multinational presence and labour productivity differentials in Indonesian manufacturing, 1975-2001," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(2), pages 221-242.
    • Handle: RePEc:taf:bindes:v:41:y:2005:i:2:p:221-242
    DOI: 10.1080/00074910500117040
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00074910500117040
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00074910500117040?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Menon, Jayant, 1998. "Total factor productivity growth in foreign and domestic firms in Malaysian manufacturing," Journal of Asian Economics, Elsevier, vol. 9(2), pages 251-280.
    2. Theodore H. Moran, 2001. "Parental Supervision: The New Paradigm for Foreign Direct Investment and Development," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa64, April.
    3. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cassey Lee & Dionisius Narjoko, 2015. "Escaping the Middle-Income Trap in Southeast Asia: Micro Evidence on Innovation, Productivity, and Globalization," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(1), pages 124-147, January.
    2. Julien Hanoteau, 2023. "Do foreign MNEs alleviate multidimensional poverty in developing countries?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 719-749, December.
    3. Eric Ramstetter, 2009. "Firm- and Plant-level Analysis of Multinationals in Southeast Asia: the Perils of Pooling Industries and Balancing Panels," Global COE Hi-Stat Discussion Paper Series gd09-106, Institute of Economic Research, Hitotsubashi University.
    4. Kelly Bird & Hal Hill & Sandy Cuthbertson, 2008. "Making Trade Policy in a New Democracy after a Deep Crisis: Indonesia," The World Economy, Wiley Blackwell, vol. 31(7), pages 947-968, July.
    5. Ahmed Fayez Abdelgouad & Christian Pfeifer & John P Weche Gelübcke, 2015. "Ownership structure and firm performance in the Egyptian manufacturing sector," Economics Bulletin, AccessEcon, vol. 35(4), pages 2197-2212.
    6. Varum, Celeste Amorim & Rocha, Vera Catarina Barros, 2011. "Do foreign and domestic firms behave any different during economic slowdowns?," International Business Review, Elsevier, vol. 20(1), pages 48-59, February.
    7. Ardiyono, Sulistiyo K. & Patunru, Arianto A., 2023. "Firms’ responses to foreign demand shocks: Evidence from Indonesia after the global financial crisis," Economic Modelling, Elsevier, vol. 128(C).
    8. Haryo Aswicahyono & Hal Hill & Dionisius Narjoko, 2010. "Industrialisation after a Deep Economic Crisis: Indonesia," Journal of Development Studies, Taylor & Francis Journals, vol. 46(6), pages 1084-1108.
    9. NAULY Dahlia & HARIANTO & HARTOYO Sri & NOVIANTI Tanti, 2022. "Foreign Ownership And Productivity Of Food Industries In Indonesia," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 17(1), pages 130-144, April.
    10. Kyoji Fukao, 2013. "Productivity and capital accumulation," Chapters, in: Hal Hill & Maria Socorro Gochoco-Bautista (ed.), Asia Rising, chapter 4, pages 104-136, Edward Elgar Publishing.
    11. Sjoholm, Fredrik & Lipsey, Robert E, 2006. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis with Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 201-221, October.
    12. Yang, Chih-Hai & Chen, Ying-Hui, 2012. "R&D, productivity, and exports: Plant-level evidence from Indonesia," Economic Modelling, Elsevier, vol. 29(2), pages 208-216.
    13. Sadayuki Takii, 2009. "Multinationals, Technology Upgrading, and Wages in Urban and Rural Indonesia," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 151-163, February.
    14. James, William E. & Ramstetter, Eric D., 2008. "Trade, foreign firms and economic policy in Indonesian and Thai manufacturing," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 413-424.
    15. Tulus Tambunnan, 2007. "Trade and Investment Liberalization Effects on SME Development: A Literature Review and a Case Study of Indonesia," Working Papers 4207, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. James, William E. & Ramstetter, Eric D., 2008. "Trade, foreign firms and economic policy in Indonesian and Thai manufacturing," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 413-424.
    2. Ramstetter, Eric D. & Ngoc, Phan Minh, 2013. "Productivity, ownership, and producer concentration in transition: Further evidence from Vietnamese manufacturing," Journal of Asian Economics, Elsevier, vol. 25(C), pages 28-42.
    3. Ramstetter, Eric D., 2017. "How important are SOEs and MNEs in Vietnam’s economy?," AGI Working Paper Series 2017-09, Asian Growth Research Institute.
    4. Noor Aini Khalifah, 2013. "Ownership and technical efficiency in Malaysia's automotive industry: A stochastic frontier production function analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(4), pages 509-535, June.
    5. Thuyen, Truong Thi Ngoc & Jongwanich, Juthathip & Ramstetter, Eric D., 2017. "Trade protection and productivity differentials between multinationals and local firms in Vietnamese manufacturing," AGI Working Paper Series 2017-01, Asian Growth Research Institute.
    6. Sanjaya Malik, 2015. "Conditional technology spillovers from foreign direct investment: evidence from Indian manufacturing industries," Journal of Productivity Analysis, Springer, vol. 43(2), pages 183-198, April.
    7. Titapa Tanchoun, 2018. "Policy and Foreign Direct Investment : Case Study of Thailand’s Automotive Industry," International Journal of Sciences, Office ijSciences, vol. 7(03), pages 1-7, March.
    8. Holger Görg & Michael Henry & Eric Strobl & Frank Walsh, 2009. "Multinational companies, backward linkages, and labour demand elasticities," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 332-348, February.
    9. Feinberg, Susan & Keane, Michael, 2005. "Intrafirm Trade of US MNCs: Findings and Implications for Models and Policies Toward Trade and Investment," MPRA Paper 55120, University Library of Munich, Germany.
    10. Matthias Arnold, Jens & Javorcik, Beata S., 2009. "Gifted kids or pushy parents? Foreign direct investment and plant productivity in Indonesia," Journal of International Economics, Elsevier, vol. 79(1), pages 42-53, September.
    11. Hallward-Driemeier,Mary C. & Kochanova,Anna & Rijkers,Bob, 2020. "Does Democratization Promote Competition? : Indonesian Manufacturing Pre and Post Suharto," Policy Research Working Paper Series 9112, The World Bank.
    12. Kyunghoon Kim & Andy Sumner & Arief Anshory Yusuf, 2018. "Is structural transformation-led economic growth immiserising or inclusive? The case of Indonesia," Departmental Working Papers 2018-11, The Australian National University, Arndt-Corden Department of Economics.
    13. Olivier N. Godart & Holger Görg, 2016. "Suppliers of multinationals and the forced linkage effect: Evidence from firm level data," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT, chapter 15, pages 277-288, World Scientific Publishing Co. Pte. Ltd..
    14. Beata S. Javorcik & Mariana Spatareanu, 2009. "Tough Love: Do Czech Suppliers Learn from their Relationships with Multinationals?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 811-833, December.
    15. Kim, Sangho & Park, Donghyun & Park, Jong-Ho, 2009. "Productivity Growth in Different Firm Sizes in the Malaysian Manufacturing Sector: An Empirical Investigation," ADB Economics Working Paper Series 176, Asian Development Bank.
    16. Hynes, Kate & Kwan, Yum K. & Foley, Anthony, 2020. "Local linkages: The interdependence of foreign and domestic firms in Ireland," Economic Modelling, Elsevier, vol. 85(C), pages 139-153.
    17. Argentino Pessoa, 2008. "Multinational Corporations, Foreign Investment, and Royalties and License Fees: Effects on Host-Country Total Factor Productivity," Notas Económicas, Faculty of Economics, University of Coimbra, issue 28, pages 6-31, December.
    18. Gorodnichenko, Yuriy & Svejnar, Jan & Terrell, Katherine, 2015. "Does Foreign Entry Spur Innovation?," CEPR Discussion Papers 10757, C.E.P.R. Discussion Papers.
    19. Thi Bich Thuy Dao & Van Quy Khuc & Manh Cuong Dong & Thuy Linh Cao, 2023. "How Does Foreign Direct Investment Drive Employment Growth in Vietnam’s Formal Economy?," Economies, MDPI, vol. 11(11), pages 1-15, October.
    20. Sourafel Girma & Holger Görg & Mauro Pisu, 2016. "Exporting, linkages and productivity spillovers from foreign direct investment," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 10, pages 191-211, World Scientific Publishing Co. Pte. Ltd..

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:bindes:v:41:y:2005:i:2:p:221-242. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CBIE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.