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Automation and Manufacturing Performance in a Developing Country

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  • Cali,Massimiliano
  • Presidente,Giorgio

Abstract

This paper provides novel evidence on the economic impact of industrial automation in a large developing economy. It combines labor force survey and manufacturing plant-level data from Indonesia over 2008–15, when the country experienced a rapid increase in imports of robots. The findings show a positive impact of robots on various measures of plants’ performance and integration into global value chains. In contrast to existing evidence on advanced and emerging economies, these plant-level impacts result in an increase in manufacturing and services employment at the local level. Such employment effects are consistent with evidence of positive employment spillovers from downstream robot-adopting plants, which help extend the benefits of automation to non-adopting plants. The spillover effects may provide a rationale to incentivize manufacturing firms to adopt industrial robots. The results also suggest that the gains from automation are not equally shared: adoption of robots is associated with a reduction in the labor share in value added and an increase in skill wage premia.

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  • Cali,Massimiliano & Presidente,Giorgio, 2021. "Automation and Manufacturing Performance in a Developing Country," Policy Research Working Paper Series 9653, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9653
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    2. Duan, Dingyun & Chen, Shaojian & Feng, Zongxian & Li, Jun, 2023. "Industrial robots and firm productivity," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 388-406.
    3. Calì, Massimiliano & Presidente, Giorgio, 2021. "Robots For Economic Development," GLO Discussion Paper Series 942, Global Labor Organization (GLO).
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    5. Lin, Changqing & Xiao, Shengpeng & Yin, Zihui, 2022. "How do industrial robots applications affect the quality upgrade of Chinese export trade?," Telecommunications Policy, Elsevier, vol. 46(10).

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