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Protection and the Dynamics of Productivity Growth: The Case of Automotive Industries in Indonesia

  • Okamoto, Yumiko

    (GSICS, Kobe University)

  • Sjöholm, Fredrik

    ()

    (The European Institute of Japanese Studies)

Indonesia, like many other countries in South East Asia, has actively promoted the automotive industry. The governmental interventions have ranged from tariffs and non-tariff barriers to various local content programs. As a result, imports of ready made cars and motorcycles have been expensive, which led to an inflow of foreign producers. This paper examines the productivity performance in the Indonesian automotive industries. More specifically, we try to answer two questions. Firstly, has the government intervention been successful in lifting the industry from its "infant industry" status? Secondly, what roles have multinational enterprises played in the development of the automotive industry in Indonesia? In examining the issues at hand, we use establishment data for the Indonesian automotive industries between 1990-1995. Our choice of methodology enables us to examine the dynamics of the different industries' productivity performance: which establishments account for most of the productivity growth, and how important entry and exit of establishments are to the overall performance.

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Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 324.

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Length: 25 pages
Date of creation: 15 Jun 1999
Date of revision:
Publication status: Published as Okamoto, Yumiko and Fredrik Sjöholm, 'Productivity in the Indonesian Automotive Industry' in ASEAN Economic bulletin, 2000, pages 1-14.
Handle: RePEc:hhs:hastef:0324
Contact details of provider: Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Phone: +46-(0)8-736 90 00
Fax: +46-(0)8-31 01 57
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  1. Blomström, Magnus & Sjöholm, Fredrik, 1998. "Technology, Transfer and Spillovers: Does Local Participation With Multinationals Matter?," CEPR Discussion Papers 2048, C.E.P.R. Discussion Papers.
  2. Sjöholm, Fredrik, 1998. "Productivity Growth in Indonesia: The Role of Regional Characteristics and Direct Foreign Investment," SSE/EFI Working Paper Series in Economics and Finance 216, Stockholm School of Economics.
  3. Hill, Hal, 1996. "Indonesia's Industrial Policy and Performance: "Orthodoxy" Vindicated," Economic Development and Cultural Change, University of Chicago Press, vol. 45(1), pages 147-74, October.
  4. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-77, July.
  5. Fredrik Sjoholm, 1999. "Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 53-73.
  6. Pang, Eng Fong & Hill H, 1988. "State and industrial restructuring: a comparison of the aerospace industry in Indonesia and Singapore," ILO Working Papers 259036, International Labour Organization.
  7. N. De Liso & G. Filatrella, 1999. "On technology competition," Working Papers 337, Dipartimento Scienze Economiche, Universita' di Bologna.
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