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Local Knowledge Spillovers in the Indonesian Manufacturing Industry

  • Bee Yan Aw

    (The Pennsylvania State University)

  • Alfons Palangkaraya

    ()

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Theoretical models have long shown that knowledge spillovers are of great economic importance to sustained economic growth and innovation and that these spillovers may be facilitated by physical and technological proximity. However, local knowledge spillovers have not been identified using data from developing countries. In this paper, we examine the relationship between knowledge spillovers and both technological and geographical proximities using micro panel data of Indonesian manufacturing plants between 1990 and 1995. We find both physical and technological proximity are significant. Knowledge spillovers are stronger among plants in the same industrial sector and their magnitude decreases monotonically with geographical distance.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2004n18.

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Length: 30 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:iae:iaewps:wp2004n18
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Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia

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