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Trade Liberalization and the Geography of Production: Agglomeration, Concentration and Dispersal in Indonesia’s Manufacturing Industry

Author

Listed:
  • Sjöberg, Örjan

    (Dept. of Economics, Stockholm School of Economics)

  • Sjöholm, Fredrik

    (EIJS at the Stockholm School of Economics)

Abstract

The effect of trade liberalization on the spatial concentration of economic activities is not straightforward. It has, on the one hand been widely argued that protectionism increase spatial concentration when firms locate close to the main domestic markets, but it has also been argued that trade expansion primarily favour existing industrial centres and therefore lead to increased regional inequalities. We examine the spatial concentration of manufacturing in Indonesia between 1980 and 1996, a period when Indonesia substantially liberalized its trade regime. The high concentration has not decreased and establishments engaged in international trade are actually comparably concentrated. We discuss some possible explanations to the spatial concentration in Indonesia and conclude that a host of factors including the spatial configuration affects the outcome of trade liberalizations.

Suggested Citation

  • Sjöberg, Örjan & Sjöholm, Fredrik, 2002. "Trade Liberalization and the Geography of Production: Agglomeration, Concentration and Dispersal in Indonesia’s Manufacturing Industry," SSE/EFI Working Paper Series in Economics and Finance 488, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0488
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    Cited by:

    1. Aloysius Gunadi, Brata, 2007. "Spatial Concentration of the Informal Small and Cottage Industry in Indonesia," MPRA Paper 12622, University Library of Munich, Germany, revised 2008.
    2. Aloysius Gunadi Brata, 2004. "Spatial Dynamic Of Small And Medium Enterprises In The Recent Economic Crisis," Urban/Regional 0409003, University Library of Munich, Germany.
    3. Churen Sun & Zhihao Yu & Tao Zhang, 2012. "Agglomeration, Productivity, and Firms¡® Exports: Evidence from Chinese Firm-level Data," ERSA conference papers ersa12p882, European Regional Science Association.
    4. Sun, Churen & Yu, Zhihao & Zhang, Tao, 2012. "Agglomeration and Trade with Heterogeneous Firms," MPRA Paper 49001, University Library of Munich, Germany, revised 17 Aug 2013.

    More about this item

    Keywords

    trade policy; geography; agglomeration; manufacturing; Indonesia;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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