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Nickel, Steel and Cars : Export Ban and Domestic Value-Added in Indonesia

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  • Kee, Hiau Looi
  • Xie, Enze

Abstract

Nickel is essential for producing iron and steel. Endowed with the world's largest reserve, Indonesia banned nickel exports in 2014 to promote industrialization. This paper studies the impacts of the export ban on downstream steel-using industries. A three-sector model shows that, while the export ban could raise the domestic value-added ratio (DVAR) in exports, the entry of smaller, inefficient firms led to aggregate efficiency losses downstream. Firm-level evidence confirms higher DVAR, smaller firm size, and larger entrant shares in downstream industries post the export ban. A field mission validated these results, while noting the continued heavy reliance on imported steel.

Suggested Citation

  • Kee, Hiau Looi & Xie, Enze, 2025. "Nickel, Steel and Cars : Export Ban and Domestic Value-Added in Indonesia," Policy Research Working Paper Series 11249, The World Bank.
    • Handle: RePEc:wbk:wbrwps:11249
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    References listed on IDEAS

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    1. Laura Alfaro & Harald Fadinger & Jan S. Schymik & Gede Virananda, 2025. "Trade and Industrial Policy in Supply Chains: Directed Technological Change in Rare Earths," NBER Working Papers 33877, National Bureau of Economic Research, Inc.

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