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The (Un)intended Consequences of Export Restrictions: Evidence from Indonesia

Author

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  • Bosker, Maarten
  • Van Den Herik, Else-Marie
  • Pelzl, Paul
  • Poelhekke, Steven

Abstract

An increasing number of developing countries are restricting non-renewable natural resource exports to encourage domestic processing, move up the global value chain, and spur local development. This paper studies the local labor-market effects of Indonesia’s voluntary export ban on unprocessed nickel and bauxite in 2014, previously a major source of export revenue. Exploiting plausibly exogenous variation in the timing of the ban, opening of new processing facilities, and the location of Indonesia's mineral deposits, we find that — after an initial dip — major investments in nickel processing increased employment in nickel mining districts. New smelters drove structural change, shifting jobs from agriculture to mining and manufacturing. In sharp contrast, the ban only led to very limited investment in bauxite processing, causing bauxite production and local employment to fall. We also find that nickel processing raised mining employment in Indonesia's coal districts, which provide the main source of energy for nickel processing.

Suggested Citation

  • Bosker, Maarten & Van Den Herik, Else-Marie & Pelzl, Paul & Poelhekke, Steven, 2025. "The (Un)intended Consequences of Export Restrictions: Evidence from Indonesia," CEPR Discussion Papers 20791, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20791
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    File URL: https://cepr.org/publications/DP20791
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    JEL classification:

    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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