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Indonesia in global manufacturing value chains: Policy ambivalence and arrested growth

Author

Listed:
  • Prema-chandra Athukorala
  • Arianto Patunru

Abstract

This paper explores Indonesia's experience in leveraging opportunities presented by global manufacturing value chains (GMVCs), with a comparative focus on Southeast Asia. It is motivated by growing concerns in recent policy discussions regarding the country’s underutilized growth potential, which could be unlocked through more effective integration into GMVCs. Indonesia initially had promising prospects for export-oriented industrialization by engaging in GMVCs. However, its industrialization trajectory over the subsequent years has not lived up to expectations. Strong evidence indicates that Indonesia’s deep-rooted policy ambivalence has hindered its full participation in global production networks. The findings highlight the need for a proactive investment promotion strategy to attract multinational enterprises (MNEs) involved in GMVCs.

Suggested Citation

  • Prema-chandra Athukorala & Arianto Patunru, 2025. "Indonesia in global manufacturing value chains: Policy ambivalence and arrested growth," Departmental Working Papers 2025-13, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2025-13
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    File URL: https://crawford.anu.edu.au/sites/default/files/2025-10/ACDE%20T%26D%20Athukorala%20%26%20Patunru%20%20%202025%2013.pdf
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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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