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Trade liberalization effects on the development of small and medium-sized enterprises in Indonesia: a case study


  • Tulus Tambunan

    () (Senior researcher, Centre for Industry, SME and Business Competition Studies, University of Trisakti, Indonesia)


The impact of international trade policy reform on the Indonesian economy, particularly in the areas of economic growth and development of the domestic manufacturing industry, has been studied extensively. However, the implications of such reform on the growth of small and medium-sized enterprises (SMEs) in Indonesia remain under-researched. This paper thus contributes to filling the gap by examining the impact of international trade policy reform, particularly following the 1997 crisis, on the growth of SMEs in Indonesia. Two main questions are posited: (a) how does international trade policy reform affect local SMEs?; and (b) has the growth of SME exports accelerated since the reform? The study does not find evidence that the reform has affected SMEs negatively. On the contrary, with the exception of a slight decline in 1998 due to the economic crisis, the number of SMEs has been growing. The paper suggests that such enterprises have not only managed to survive, but they have also been able to increase their output. Their exports also increased annually.

Suggested Citation

  • Tulus Tambunan, 2008. "Trade liberalization effects on the development of small and medium-sized enterprises in Indonesia: a case study," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 15(2), pages 35-59, December.
  • Handle: RePEc:unt:jnapdj:v:15:y:2008:i:2:p:35-59

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    References listed on IDEAS

    1. A. Aggarwal, 2002. "Liberalisation, Multinational Enterprises and Export Performance: Evidence from Indian Manufacturing," Journal of Development Studies, Taylor & Francis Journals, vol. 38(3), pages 119-137.
    2. Jens Kaüger & Uwe Cantner & Horst Hanusch, 2000. "Total factor productivity, the east Asian miracle, and the world production frontier," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(1), pages 111-136, March.
    3. S Roberts, 2000. "Understanding the Effects of Trade Policy Reform: The Case of South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 68(4), pages 270-281, December.
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    Cited by:

    1. Larissa Flister & Viktoriya Galushko, 2016. "The impact of wheat market liberalization on the seed industry’s innovative capacity: an assessment of Brazil’s experience," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-20, December.
    2. Tambunan, Tulus, 2015. "Financial Inclusion, Financial Education, and Financial Regulation: A Story from Indonesia," ADBI Working Papers 535, Asian Development Bank Institute.

    More about this item


    Trade liberalization; SME; Indonesia; export; LEs;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance


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