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Local Knowledge Spillovers in the Indonesian Manufacturing Industry

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  • Bee Yan Aw

    (The Pennsylvania State University)

  • Alfons Palangkaraya

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

Theoretical models have long shown that knowledge spillovers are of great economic importance to sustained economic growth and innovation and that these spillovers may be facilitated by physical and technological proximity. However, local knowledge spillovers have not been identified using data from developing countries. In this paper, we examine the relationship between knowledge spillovers and both technological and geographical proximities using micro panel data of Indonesian manufacturing plants between 1990 and 1995. We find both physical and technological proximity are significant. Knowledge spillovers are stronger among plants in the same industrial sector and their magnitude decreases monotonically with geographical distance.

Suggested Citation

  • Bee Yan Aw & Alfons Palangkaraya, 2004. "Local Knowledge Spillovers in the Indonesian Manufacturing Industry," Melbourne Institute Working Paper Series wp2004n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2004n18
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2004n18.pdf
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    References listed on IDEAS

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    Cited by:

    1. Eduardo Goncalves & Eduardo Almeida, 2009. "Innovation and Spatial Knowledge Spillovers: Evidence from Brazilian Patent Data," Regional Studies, Taylor & Francis Journals, vol. 43(4), pages 513-528.
    2. Sadayuki Takii, 2009. "Multinationals, Technology Upgrading, and Wages in Urban and Rural Indonesia," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 151-163, February.
    3. Mahmut Yaşar & Catherine Paul, 2012. "Firm performance and knowledge spillovers from academic, industrial and foreign linkages: the case of China," Journal of Productivity Analysis, Springer, vol. 38(3), pages 237-253, December.

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