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Domestic Value Added, Exports and Employment: An Input–Output Analysis of Indonesian Manufacturing

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  • Prema-chandra Athukorala
  • Arianto A. Patunru

Abstract

The paper is motivated by the current emphasis on the share of domestic value added in exports (SVEX) as a policy criterion for export development strategy in developing countries. We hypothesise that the policy emphasis on SVEX, which harks back to the import-substitution era, is inconsistent with the objectives of achieving economic growth with employment generation in this era of economic globalisation. We test this hypothesis by examining the relationship of SVEX with both export-induced employment and the total domestic value added (the contribution of exports to gross domestic product) by applying the standard input–output methodology to data from Indonesian manufacturing. Our findings do not support the view, widely held in policy circles, that manufacturing industries characterised by a higher SVEX have the potential to make a greater contribution to employment generation and total domestic value added. The policy inference is that policymakers should focus on the export potential of industries when designing export development policy, rather than on SVEX.

Suggested Citation

  • Prema-chandra Athukorala & Arianto A. Patunru, 2023. "Domestic Value Added, Exports and Employment: An Input–Output Analysis of Indonesian Manufacturing," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 59(3), pages 365-390, September.
    • Handle: RePEc:taf:bindes:v:59:y:2023:i:3:p:365-390
    DOI: 10.1080/00074918.2022.2134554
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    Cited by:

    1. Rashesh Shrestha, 2022. "Skill Development System: Soft Infrastructure for Leapfrogging and Feedback," Chapters, in: Fukunari Kimura & Keita Oikawa (ed.), The Comprehensive Asia Development Plan (CADP) 3.0: Towards an Integrated, Innovative, Inclusive, and Sustainable Economy, chapter 9, pages 278-292, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Hai Thanh Nguyen, 2021. "Intersectoral linkages and imports of Vietnam: an input–output approach," International Journal of Economic Policy Studies, Springer, vol. 15(1), pages 205-231, February.
    3. Hai Thanh Nguyen, 2021. "Intersectoral linkages and imports of Vietnam: An input-output approach," Departmental Working Papers 2021-03, The Australian National University, Arndt-Corden Department of Economics.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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