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Protection and the Dynamics of Productivity Growth: The Case of Automotive Industries in Indonesia

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  • Okamoto, Yumiko

    (GSICS, Kobe University)

  • Sjöholm, Fredrik

    (The European Institute of Japanese Studies)

Abstract

Indonesia, like many other countries in South East Asia, has actively promoted the automotive industry. The governmental interventions have ranged from tariffs and non-tariff barriers to various local content programs. As a result, imports of ready made cars and motorcycles have been expensive, which led to an inflow of foreign producers. This paper examines the productivity performance in the Indonesian automotive industries. More specifically, we try to answer two questions. Firstly, has the government intervention been successful in lifting the industry from its "infant industry" status? Secondly, what roles have multinational enterprises played in the development of the automotive industry in Indonesia? In examining the issues at hand, we use establishment data for the Indonesian automotive industries between 1990-1995. Our choice of methodology enables us to examine the dynamics of the different industries' productivity performance: which establishments account for most of the productivity growth, and how important entry and exit of establishments are to the overall performance.

Suggested Citation

  • Okamoto, Yumiko & Sjöholm, Fredrik, 1999. "Protection and the Dynamics of Productivity Growth: The Case of Automotive Industries in Indonesia," SSE/EFI Working Paper Series in Economics and Finance 324, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0324
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    References listed on IDEAS

    as
    1. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Multinational Corporations and Spillovers," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 8, pages 101-133, Palgrave Macmillan.
    2. Blomstrom, Magnus & Sjoholm, Fredrik, 1999. "Technology transfer and spillovers: Does local participation with multinationals matter?1," European Economic Review, Elsevier, vol. 43(4-6), pages 915-923, April.
    3. Hill, Hal, 1996. "Indonesia's Industrial Policy and Performance: "Orthodoxy" Vindicated," Economic Development and Cultural Change, University of Chicago Press, vol. 45(1), pages 147-174, October.
    4. Fredrik Sjoholm, 1999. "Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 53-73.
    5. Pang, Eng Fong. & Hill H., 1988. "State and industrial restructuring: a comparison of the aerospace industry in Indonesia and Singapore," ILO Working Papers 992590363402676, International Labour Organization.
    6. repec:ilo:ilowps:259036 is not listed on IDEAS
    7. Sjoholm, Fredrik, 1999. "Productivity Growth in Indonesia: The Role of Regional Characteristics and Direct Foreign Investment," Economic Development and Cultural Change, University of Chicago Press, vol. 47(3), pages 559-584, April.
    8. N. De Liso & G. Filatrella, 1999. "On technology competition," Working Papers 337, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. repec:bla:jecsur:v:12:y:1998:i:3:p:247-77 is not listed on IDEAS
    10. Yumiko Okamoto, 1999. "Multinationals, production efficiency, and spillover effects: The case of the U.S. auto parts industry," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(2), pages 241-260, June.
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    Cited by:

    1. Virginie Vial, 2008. "How Much Does Turnover Matter? Evidence from Indonesian Manufacturing Total Factor Productivity Growth, 1975-95," Oxford Development Studies, Taylor & Francis Journals, vol. 36(3), pages 295-322.
    2. Jojo Jacob, 2005. "Late Industrialization and Structural Change: Indonesia, 1975-2000," Oxford Development Studies, Taylor & Francis Journals, vol. 33(3-4), pages 427-451.
    3. Phan, Tuan & Nguyen, Van Anh Thi, 2008. "Impacts of the Protection Policy for Vietnam’s Automobile Industry," MPRA Paper 54067, University Library of Munich, Germany, revised 01 Mar 2013.
    4. Jose L. Tongzon, 2002. "The Economies of Southeast Asia, Second Edition," Books, Edward Elgar Publishing, number 2029.
    5. Virginie Vial, 2006. "New Estimates Of Total Factor Productivity Growth In Indonesian Manufacturing," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(3), pages 357-369.

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    More about this item

    Keywords

    Productivity; Growth; Automotive industry; Indonesia; Protection.;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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