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Exports and Job Creation in Indonesia Before and After the Asian Financial Crisis

Author

Listed:
  • Haryo Aswicahyono
  • Chris Manning

Abstract

Employment generation has been a challenge in Indonesia since the Asian Financial Crisis (AFC), especially in labor-intensive manufacturing. We examine the direct and indirect impact of exports on jobs, based on an analysis of input-output tables over the period 1985-2005, and compare these findings with the earlier pre-crisis period. The paper finds that fewer jobs were created through exports in manufacturing industries in after the AFC, because of slower growth in manufacturing exports and a shift away from light industry. However, there was an increase in service sector jobs, partly because of linkages with the main export industries in manufacturing and primary industry. Besides intensified competition from other lower-middle income Asian economies, the main constraints to job creation through exports appear to have been on the supply side; these include too poor infrastructure, an uncertain investment climate and tight labor regulations.

Suggested Citation

  • Haryo Aswicahyono & Chris Manning, 2011. "Exports and Job Creation in Indonesia Before and After the Asian Financial Crisis," Departmental Working Papers 2011-11, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2011-11
    as

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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2011/wp_econ_2011_11.pdf
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    References listed on IDEAS

    as
    1. Aswicahyono, Haryo & Narjok, Dionisius, 2011. "Indonesian Industrialization," WIDER Working Paper Series 053, World Institute for Development Economic Research (UNU-WIDER).
    2. Manning,Chris, 1998. "Indonesian Labour in Transition," Cambridge Books, Cambridge University Press, number 9780521594127, May.
    3. Prema-Chandra Athukorala, 2006. "Post-crisis export performance: The Indonesian experience in regional perspective," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(2), pages 177-211.
    4. Asep Suryahadi & Wenefrida Widyanti & Daniel Perwira & Sudarno Sumarto, 2003. "Minimum Wage Policy And Its Impact On Employment In The Urban Formal Sector," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(1), pages 29-50.
    5. Prema-chandra Athukorala, 2005. "Product Fragmentation and Trade Patterns in East Asia," Asian Economic Papers, MIT Press, vol. 4(3), pages 1-27, Fall.
    6. Chris Manning & Kurnya Roesad, 2007. "The Manpower Law of 2003 and its implementing regulations: Genesis, key articles and potential impact," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 43(1), pages 59-86.
    7. Prema-chandra Athukorala & Bambang Santosa, 1997. "Gains from Indonesian Export Growth: Do Linkages Matter?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 33(2), pages 73-95.
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    Cited by:

    1. Reda Cherif & Fuad Hasanov, 2014. "Soaring of the Gulf Falcons; Diversification in the GCC Oil Exporters in Seven Propositions," IMF Working Papers 14/177, International Monetary Fund.

    More about this item

    Keywords

    exports; employment creation; manufacturing growth; input-output analysis; Indonesia; Southeast Asia;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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