IDEAS home Printed from https://ideas.repec.org/p/hhs/hastef/0348.html
   My bibliography  Save this paper

FDI and the Dynamics of Productivity: Microeconomic Evidence

Author

Listed:
  • Okamoto, Yumiko

    (Department of Economics, GSID, Nagoya University)

  • Sjöholm, Fredrik

    (The European Institute of Japanese Studies)

Abstract

This paper examines productivity growth in the Indonesian manufacturing sector. We use a longitudinal data set to calculate the effects on aggregate manufacturing productivity growth from improvements within establishments, from reallocation of market shares, and from the turnover of plants. The difference between domestic and foreign owned plants is examined together with a calculation of the foreign owned plants' contribution to overall productivity growth. Productivity growth is mainly explained by reallocation of market shares and from turnover of plants. In addition, we find foreign plants to contribute significantly to overall productivity growth and there is a difference in the causes to productivity growth between foreign and domestic plants.

Suggested Citation

  • Okamoto, Yumiko & Sjöholm, Fredrik, 1999. "FDI and the Dynamics of Productivity: Microeconomic Evidence," SSE/EFI Working Paper Series in Economics and Finance 348, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0348
    as

    Download full text from publisher

    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.tab.ps.zip
    File Function: Tables
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.tab.ps
    File Function: Tables
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.tab.pdf
    File Function: Tables
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.tab.pdf.zip
    File Function: Tables
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.pdf.zip
    File Function: Complete Rendering
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.pdf
    File Function: Complete Rendering
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.ps.zip
    File Function: Complete Rendering
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0348.ps
    File Function: Complete Rendering
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Roberts, Kevin & Weitzman, Martin L, 1981. "Funding Criteria for Research, Development, and Exploration Projects," Econometrica, Econometric Society, vol. 49(5), pages 1261-1288, September.
    3. Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-938, October.
    4. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 641-680.
    5. Ariel Pakes & Paul McGuire, 1994. "Computing Markov-Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model," RAND Journal of Economics, The RAND Corporation, vol. 25(4), pages 555-589, Winter.
    6. Pakes, Ariel & Ericson, Richard, 1998. "Empirical Implications of Alternative Models of Firm Dynamics," Journal of Economic Theory, Elsevier, vol. 79(1), pages 1-45, March.
    7. Blomstrom, Magnus, 1988. "Labor productivity differences between foreign and domestic firms in Mexico," World Development, Elsevier, vol. 16(11), pages 1295-1298, November.
    8. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    9. Kim Jong-Il & Lau Lawrence J., 1994. "The Sources of Economic Growth of the East Asian Newly Industrialized Countries," Journal of the Japanese and International Economies, Elsevier, vol. 8(3), pages 235-271, September.
    10. Zvi Griliches & Haim Regev, 1992. "Productivity and Firm Turnover in Israeli Industry: 1979-1988," NBER Working Papers 4059, National Bureau of Economic Research, Inc.
    11. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    12. John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
    13. Jan Fagerberg & Pär Hansson & Lars Lundberg & Arne Melchoir (ed.), 1997. "Technology and International Trade," Books, Edward Elgar Publishing, number 1192.
    14. H. Aswicahyono & H. Hill, 2002. "'Perspiration' vs 'Inspiration' in Asian Industrialisation: Indonesia Before the Crisis," Journal of Development Studies, Taylor & Francis Journals, vol. 38(3), pages 138-163.
    15. Blomstrom, Magnus & Sjoholm, Fredrik, 1999. "Technology transfer and spillovers: Does local participation with multinationals matter?1," European Economic Review, Elsevier, vol. 43(4-6), pages 915-923, April.
    16. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    17. Campbell, J.R., 1995. "Entry, Exit, Technology, and Business Cycles," RCER Working Papers 407, University of Rochester - Center for Economic Research (RCER).
    18. W H Davidson & Donald G McFetridge, 1985. "Key Characteristics in the Choice of International Technology Transfer Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 16(2), pages 5-21, June.
    19. Lambson, V.E., 1989. "Industry Evolution With Sunk Costs And Uncertian Market Conditions," Working papers 8904, Wisconsin Madison - Social Systems.
    20. James Levinsohn & Amil Petrin, 1999. "When Industries Become More Productive, Do Firms?," NBER Working Papers 6893, National Bureau of Economic Research, Inc.
    21. Levinsohn, J. & Petrin, A., 1999. "When Industries Become More Productive, Do Firms?: Investigating Productivity Dynamics," Working Papers 445, Research Seminar in International Economics, University of Michigan.
    22. Bee Yan Aw & Xiaomin Chen & Mark J. Roberts, 1997. "Firm-level Evidence on Productivity Differentials, Turnover, and Exports in Taiwanese Manufacturing," NBER Working Papers 6235, National Bureau of Economic Research, Inc.
    23. Caballero, Ricardo J & Hammour, Mohamad L, 1994. "The Cleansing Effect of Recessions," American Economic Review, American Economic Association, vol. 84(5), pages 1350-1368, December.
    24. Edwin Mansfield & Anthony Romeo, 1980. "Technology Transfer to Overseas Subsidiaries by U. S.-Based Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(4), pages 737-750.
    25. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    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. Mahmut Yasar & Roderick Rejesus & Ilhami Mintemur, 2004. "Is there evidence of creative destruction in the Turkish manufacturing sector? Lessons from a cross-industry analysis of aggregate productivity growth," Applied Economics, Taylor & Francis Journals, vol. 36(17), pages 1937-1945.
    2. Joshua Aizenman & Mark M. Spiegel, 2006. "Institutional Efficiency, Monitoring Costs and the Investment Share of FDI," Review of International Economics, Wiley Blackwell, vol. 14(4), pages 683-697, September.
    3. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.

    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. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    2. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    3. Yumiko Okamoto & Fredrik Sjoholm, 2005. "FDI and the Dynamics of Productivity in Indonesian Manufacturing," Journal of Development Studies, Taylor & Francis Journals, vol. 41(1), pages 160-182.
    4. Riadh Ben Jelili, "undated". "Firm Heterogeneity and Productivity: The Contribution of Microdata," API-Working Paper Series 1013, Arab Planning Institute - Kuwait, Information Center.
    5. Bartelsman, Eric & Haltiwanger, John C. & Scarpetta, Stefano, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," IZA Discussion Papers 1374, Institute of Labor Economics (IZA).
    6. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, July.
    7. Ha-Joon Chang & Ali Cheema & L. Mises, 2002. "Conditions For Successful Technology Policy In Developing Countries—Learning Rents, State Structures, And Institutions," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(4-5), pages 369-398.
    8. Katariina Hakkala, 2006. "Corporate restructuring and labor productivity growth," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 15(4), pages 683-714, August.
    9. repec:eee:labchp:v:3:y:1999:i:pb:p:2711-2805 is not listed on IDEAS
    10. Lucia Foster & Cheryl Grim & John Haltiwanger, 2016. "Reallocation in the Great Recession: Cleansing or Not?," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 293-331.
    11. Raphael Bergoeing & Andrés Hernando & Andrea Repetto, 2003. "Idiosyncratic Productivity Shocks and Plant-Level Heterogeneity," Documentos de Trabajo 173, Centro de Economía Aplicada, Universidad de Chile.
    12. Michele Cincera, 2004. "Impact of market entry and exit on EU productivity and growth performance," ULB Institutional Repository 2013/921, ULB -- Universite Libre de Bruxelles.
    13. Aw, Bee Yan & Chen, Xiaomin & Roberts, Mark J., 2001. "Firm-level evidence on productivity differentials and turnover in Taiwanese manufacturing," Journal of Development Economics, Elsevier, vol. 66(1), pages 51-86, October.
    14. Koen de Backer, 2002. "Foreign ownership and productivity dynamics," Economics Working Papers 617, Department of Economics and Business, Universitat Pompeu Fabra.
    15. Lundin, Nannan & Sjöholm, Fredrik & Qian , Jinchang, 2006. "The Role Of Small Firms In China’S Technology Development," EIJS Working Paper Series 227, Stockholm School of Economics, The European Institute of Japanese Studies.
    16. Andersson, Fredrik, 1999. "Job flows in Swedish manufacturing 1972-1996," Working Paper Series 1999:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    17. Amil Petrin & James Levinsohn, 2005. "Measuring Aggregate Productivity Growth Using Plant-Level Data," NBER Working Papers 11887, National Bureau of Economic Research, Inc.
    18. James Bergin & Dan Bernhardt, 2008. "Industry dynamics with stochastic demand," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 41-68, March.
    19. David Greenstreet, 2007. "Exploiting Sequential Learning to Estimate Establishment-Level Productivity Dynamics and Decision Rules," Economics Series Working Papers 345, University of Oxford, Department of Economics.
    20. Aradhna Aggarwal & Takahiro Sato, 2011. "Firm Dynamics and Productivity Growth in Indian Manufacturing: Evidence from Plant Level Panel Dataset," Discussion Paper Series DP2011-07, Research Institute for Economics & Business Administration, Kobe University.
    21. Joze P. Damijan & Mark Knell & Boris Majcen & Matija Rojec, 2003. "Technology Transfer through FDI in Top-10 Transition Countries: How Important are Direct Effects, Horizontal and Vertical Spillovers?," William Davidson Institute Working Papers Series 549, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    Productivity growth; Plants; Turnover; Manufacturing; Indonesia;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hhs:hastef:0348. 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: Helena Lundin (email available below). General contact details of provider: https://edirc.repec.org/data/erhhsse.html .

    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.