FDI and wage spillovers in Indonesian manufacturing

This paper examines the effect of foreign direct investment in Indonesian manufacturing on wages in locally owned Indonesian manufacturing plants. The issue is examined in a cross section of Indonesian manufacturing industries and provinces in one of the few years for which data on worker characteristics were available. Wages in locally owned plants were high in industries and industries within provinces with large foreign presence. Since the foreign plants also pay higher wages than locally owned ones, the two factors together imply that higher foreign presence raises the general wage level in a province and industry. JEL no. F2, J3 This paper was prepared as part of an ICSEAD project on “Foreign Multinational Corporations and Host-Country Labor Markets in Asia”. Earlier versions appeared as ICSEAD Working Paper 2001–02 and NBER Working Paper No. 8299.     

Productivity spillovers from foreign multinationals and trade protection: firm‐level analysis of Vietnamese manufacturing

This paper examines how the presence of foreign multinational enterprises (MNEs) affects productivity in domestic private firms in Vietnamese manufacturing in 2005–10. The paper also examines how import protection has affected these productivity spillovers and how spillovers from wholly foreign MNEs and joint ventures differ. The most consistent result suggests wholly foreign MNEs impart negative spillovers while joint ventures tend to generate positive spillovers. Theory and random effects estimates also indicate that import protection reduces local firm productivity and weakens the effect of spillovers from all MNEs; but this result is not obtained when a fixed effects estimator is used. Results are similar in samples of labour‐intensive industries, which include close to three fourths of all sample firms, but differ markedly for more capital‐intensive groups.     

Indonesian population growth 1971-1980

The author reviews the accuracy of the preliminary results of the 1980 Indonesian population census. Methodological weaknesses and errors made in implications for evaluating the effectiveness of family planning programs are considered     

Productivity response to reduction in trade barriers: evidence from Turkish manufacturing plants

We examine the effects of trade policy changes on the evolution of productivity in the Turkish manufacturing industry. Plant level productivities are estimated for the 1983–1996 period following the procedure of Olley and Pakes. Industry averages indicate that productivity gains are largest in import-competing industries with highest gains reaching 8% per year during periods of rapid decline in protection rates. We find that productivity improvements resulting from declining protection rates are statistically significant and economically important, especially in import-competing sectors. More importantly, productivity improvements due to declining protection rates increase with the plant size.

Factor inputs and U.S. manufacturing trade structure: 1963–1980

Zusammenfassung Faktoreinsatz und Struktur des US-Handels mit Industrieprodukten 1963–1980. — Der Autor analysiert die Determinanten für die Struktur des US-Handels mit verschiedenen Handelspartnern und untersucht, welche strukturellen ?nderungen dieser Beziehungen zwischen 1963 und 1980 stattgefunden haben. Er benutzt ein modifiziertes Faktorproportionen-Modell mit mehreren Produktionsfaktoren und sch?tzt die simultanen Wirkungen von Humankapital, Realkapital, Arbeit und Skalenertr?gen auf die Nettoexporte der USA von Industriegütern. Die Ergebnisse der Regressionen best?tigen in den meisten F?llen — und besonders für die früheren Jahredas Leontief-Paradoxon und Leontiefs Erkl?rung, die die Bedeutung des Humankapitals als Quelle komparativer Vorteile hervorhebt. Ermittelt werden strukturelle Ver?nderungen sowohl für den Globalhandel der USA als auch für den bilateralen Handel mit Japan, Kanada und den Schwellenl?ndern, da diese L?nder alle zwischen 1963 und 1980 bedeutende Handelspartner der Vereinigten Staaten geworden sind.

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Résumé Emploi des facteurs de production et la structure du commerce industriel des Etats Unis: 1963-1980. — Dans cette étude l'auteur analyse les déterminants du commerce des Etats Unis avec de plusieurs partenaires commerciaux et examine quels changements structurels ont eu lieu dans ces relations entre 1963 et 1980. En utilisant un modèle des proportions multi-facteurs, ce modèle mesure l’effet simultané du capital humain et physique, du travail et des économies d’échelle sur les exportations nettes américaines des produits industriels. Dans la plupart des cas et particulièrement pour les années antérieures, ce modèle confirme le ?Leontief Paradox? et son explication qui souligne le r?le du capital humain comme source de l’avantage comparatif. L’auteur découvre des changements structurels dans le commerce global des Etats Unis et aussi dans le commerce bilatéral avec le Japon, le Canada et les nouveaux pays industrialisés parce que tous sont devenus des partenaires importants avec les Etats Unis entre les années 1963 et 1980.

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Resumen Contenido de factores y la estructura del comercio manufacturera de los EE UU: 1963-1980. — En este trabajo se analiza el perfil del comercio de los EE UU con diferentes paises y también se examina qué cambios estructurales tuvieron lugar en estas relaciones entre 1963 y 1980. Utilizando un modelo modificado de proporción de factores múltiples se mide el impacto simultáneo de capital humano, capital fisico, trabajo y de economias de escala sobre las exportaciones manufactureras netas de los EE UU. Los resultados de regresiones confirman casi siempre y especialmente para a∼nos lejanos la paradoja de Leontief y la explication para ella, que enfatiza el papel del capital humano como una fuente de ventajas comparativas. Se detectan cambios estructurales en el comercio global de los EE UU y en el comercio bilateral de los EE UU con el Japón, el Canadá y los NICs, al haber alcanzado todos ellos un importante tráfico comertial con los EE UU entre 1963 y 1980.

     

Domestic efficiency,international efficiency and gains from trade

Zusammenfassung Heimische Effizienz, internationale Effizienz und Handelsgewinne.-Dieser Aufsatz entwickelt das Konzept der heimischen Effizienz, integriert die heimische Ineffizienz mit der Theorie des internationalen Handels und untersucht die Implikationen für das Muster und die Gewinne des internationalen Handels. Wenn die orthodoxe Theorie des internationalen Handels von der Annahme abh?ngt, da? die internationale Wettbewerbsf?higkeit einer Firma die Faktorkombination und die Faktorknappheit widerspiegelt, dann k?nnte jede Abweichung von dem angenommenen Kostenminimum das Muster des internationalen Handels beeinflussen. Die zwischen konkurrierenden Industrien verschiedener L?nder unterschiedlich gro?en Abweichungen von dem Kostenminimum sind offensichtlich das Problem. Abschlie?end weist der Aufsatz darauf hin, wie diese Ausweitung der Theorie des internationalen Handels den Handlungsspielraum der Regierungen berührt.

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Résumé L'efficience locale, l'efficience internationale et les gains de l'échange international.-Dans cet article l'auteur développe le concept de l'efficience locale, intègre l'inefficacité locale dans la théorie de l'échange international et examine les implications pour la structure et les gains de l'échange international. Si la théorie orthodoxe de l'échange international dépend de la supposition que la capacité concurrentielle internationale des entreprises reflète les combinaisons et la rareté des facteurs, l'existence de chaque déviation de la minimisation des co?ts supposée pourrait affecter la structure du commerce international. Clairement, les différences en mesure de déviation de la minimisation des co?ts entre des industries en concurrence dans les pays différents est le problème central. Finalement, l'article indique comment cette extension de la théorie de l'échange international affecte la liberté d'action des gouvernements.

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Resumen Eficiencia nacional, eficiencia international y beneficios del comercio.-Este artículo desarrolla el concepto de eficiencia nacional, intégra la ineficiencia nacional a la teoría del comercio internacional y examina sus implicaciones para la estructura y los beneficios del comercio. Dado que la teoría ortodoxa del comercio internacional depende del supuesto de que la competitividad internacional de las empresas refleja la compositión y la escasez de factores, la existencia de situaciones en las que no se da la minimizatión de costos supuesta podría afectar la estructura del comercio internacional. En efecto, la medida en la cual los costos de las empresas de distintos países que compiten entre sí difieren del nivel mínimo de costos constituye el problema esencial. Finalmente, el artículo indica cómo esta extensión de la teoría del comercio internacional afecta la libertad de actión de los gobiernos.

     

Productivity growth in Indonesian agriculture, 1961–2000

This paper uses an index number approach to measure total factor productivity (TFP) growth in Indonesian crop and livestock agriculture from 1961 to 2000. Tornqvist-Theil chain-weighted indices of output, input and TFP are developed to minimise biases that may result from relative changes in input and output price aggregation weights. The results indicate that agricultural TFP growth accelerated in the 1970s and 1980s but stagnated in the 1990s. Without new efforts to increase productivity in agriculture, Indonesia's goal of using agricultural growth to generate broad-based rural development and further reduce poverty may be undermined.     

Trade, technology spillovers, and food production in China

Trade, Technology Spillovers, and Food Production in China. — This paper studies technology spillovers between China and other countries, international trade in inputs being the prime carrier of knowledge in agricultural production. Human capital characteristics and structural characteristics of the agricultural production sys-tems determine the local usability of foreign knowledge for Chinese farmers. The authors utilize a multi-region applied general equilibrium model to analyze Chinese opportunities to benefit from foreign technology improvements in grain production. It is shown that possible negative welfare effects of unilateral trade liberalization of China against North American imports of agricultural inputs may be more than compensated by productivity gains if technology spillovers are included.     

Factor market distortions and gains from trade revisited

Zusammenfassung Gesamtwirtschaftliche Au\enhandelsgewinne bei unvollkommenen Faktorm?rkten. — In diesem Aufsatz werden die Standardtheoreme über die Vorteilhaftigkeit des Au\enhandels unter der Annahme untersucht, da\ auf beiden Faktorm?rkten (für Kapital und Arbeit) intersektorale Faktorpreisunterschiede bestehen. Wenn Unvollkommenheiten auf beiden Faktorm?rkten angenommen werden, ergeben sich Resultate, die erheblich von denen bei Unvollkommenheiten auf nur einem Faktormarkt abweichen. Die interessanteren Ergebnisse der Untersuchung sind: 1. Alle üblichen Theoreme über Wohlfahrtsgewinne aus dem Au\enhandel k?nnen auf einer niedrigeren inferioren Transformationskurve gelten; 2. eine Zunahme (Abnahme) des Verzerrungsgrades kann die Wohlfahrt erh?hen (reduzieren); 3. eine Verbesserung (Verschlechterung) der Terms of Trade kann gr?\ere Wohlfahrtsgewinne (-Verluste) bewirken, als es ohne Verzerrungen der Fall w?re; 4. sollte der Grad der Verzerrung auf dem Kapital- und auf dem Arbeitsmarkt gleich gro\ sein, dann entspricht eine Politik der Produktionsbesteuerung mit Subventionen einer Politik der Faktorbesteuerung mit Subventionen; folglich gibt es dann keine ?second? und ?first best?-Politik.

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Résumé Les distorsions sur les marchés des facteurs de production et les gains de l’échange international. — Cet article examine les théorèmes usuels de gains de l’échange international sous la supposition qu’il y a une différenciation intersectorielle des prix de facteurs sur le marché de capitaux et assi sur le marché du travail. Les imperfections sur les deux marchés conduisent aux résultats qui sont bien différents de ceux qu’on obtient sur la base d’une différenciation des prix de seulement un facteur de production. Les résultats intéressants sont les suivants: (1) Tous les théorèmes usuels de gains de l’échange international sont probablement valables pour des courbes inférieures de transformation; (2) si le degré de la distorsion s’accro?t (décro?t), le bien-être peut s’améliorer (se détériorer); (3) l’amélioration (détérioration) des termes de l’échange peut conduire à une augmentation (diminution) du bien-être qui est plus grande que dans le cas ou il n’y a pas de distorsions; (4) si le degré de la distorsion est aussi haut sur le marché de capitaux que sur le marché du travail, une politique de la taxe sur la production en combinaison des subventions est équivalente à une politique de la taxe sur le facteur en combinaison des subventions; à cause de cela elles cessent d’être une politique de ?second best? et de ?first best?.

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Resumen Revisión de las distorsiones del mercado de factores y de los beneficios del comercio. — Este trabajo examina los teoremas corrientes sobre beneficios del comercio, bajo el supuesto que ambos mercados (capital y trabajo) se caracterizan por una differencia intersectoral en los precios de los factores. Imperfecciones en ambos mercados de factores dan resultados bastante diferentes a los que se obtienen sobre la basis de una ?nica diferencia en el precio de los factores. Los resultados más interesantes son: (1) todos los teoremas corrientes sobre beneficios del comercio pueden ser válidos para las curvas de transformación inferior; (2) un aumento (disminución) del grado de distorsión puede aumentar (disminuir) el bienestar; (3) un mejoramiento (deterioro) en los términos del intercambio puede resultar en una ganancia (pérdida) de bienestar, que es máyor que en el caso en que no hay distorsiones; (4) si el grado de distorsión en ambos mercados, el de capitales y el de trabajo, es igual, entonces una pol?utica de impuestos en combinación con subsidios a la producción se torna equivalente a una politica de impuestos en combinación con subsidios a los factores y, por lo tanto, ellas ya no constituyen más políticas ?second best? y ?first best?.

     

Real Output and Labour Productivity in Indonesian Manufacturing, 1975–90

This article presents estimates of purchasing power parities, real output and labour productivity in medium and large scale manufacturing in a binary comparison between Indonesia and the USA in the benchmark year 1987, It applies an industry of origin approach, comparing product unit values from the censuses of both countries. The 1987 PPP for manufacturing was Rp 1,200/$. Gross value added per person employed in 1987 was 10% of that in the USA. With the use of national time series, the 1987 benchmark was extrapolated backwards and forwards to derive productivity comparisons for the years 1975–90 in 15 branches of manufacturing. 1975–80 was a period of catch-up, with labour productivity increasing from 7.7 to 10.6% of the US level. Between 1980 and 1990 catch-up stagnated: relative productivity remained unchanged despite considerable productivity growth in Indonesia, Comparisons with other Asian economies show that labour productivity in Indonesia was somewhat higher than in India, but was still lower in 1990 than that of South Korea in 1970.     

Trade, foreign firms and economic policy in Indonesian and Thai manufacturing

This paper first examines the rapid growth and changing composition of manufactured exports in Indonesia and Thailand, highlighting the rapid growth of office and computer machinery and electric machinery, somewhat slower growth of non-electric and transportation machinery, as well as the low growth of previously large exports of textiles apparel. Second, the important contributions of foreign multinational enterprises (MNEs) to export growth in the machinery industries, particularly in electric, office, and computing machinery, are documented. Third, the paper describes trade policies in all these industries in some detail, emphasizing how low protection was a key facilitator of rapid export growth in the MNEs that dominated the electric, office, and computing machinery industry, while high protection reduced incentives to export among MNEs in the transportation machinery industry.     

Efficiency and productivity analyses of Indonesian manufacturing industries

This study estimates the technical efficiencies and total factor productivity (TFP) growths in food, textile, chemical and metal products industries from 1993 to 2000 in Indonesia by using the stochastic frontier model. Furthermore, the determinants of inefficiency are also analyzed and TFP growth is decomposed into technological progress, a scale component, and efficiency growth. The results reveal that the food, textile, chemical and metal products sectors are on average 50.79%, 47.89%, 68.65% and 68.91% technically efficient, respectively. It is noted that ownership contributed to technical inefficiencies in the food sector; location and size contributed to technical inefficiencies in the textile sector, whereas size, ownership and age contributed to inefficiencies in the chemical and metal products sectors. We note that productivity in food, textile, and metal products sectors decreased at the rate of 2.73%, 0.26%, and 1.65%, respectively, but increased at a rate of 0.5% in the chemical sector. The decomposition of TFP growth indicates that the growths are driven positively by technical efficiency changes and negatively by technological progress in all four sectors.     

Multinational presence and labour productivity differentials in Indonesian manufacturing, 1975–2001

Foreign multinational corporations (MNCs) have accounted for important shares of employment and production in Indonesian manufacturing since 1975, and these shares increased especially rapidly in the early to mid-1990s. These increases were concentrated in the machinery industries and in MNCs with large foreign ownership shares, and continued through the crisis of 1997–98 and beyond, despite apparently large withdrawals of inward foreign direct investment in 1998 and subsequent years. MNCs generally had much higher average labour productivity than local plants and, after controlling for plant-level variation in electricity consumption per employee, size and vintage, we found that these differentials persisted in about three-quarters of the cases examined. However, there was also large variation in MNC presence and in MNC–local productivity differentials across industries and time, with statistically insignificant differentials most common in apparel and footwear, as well as in MNCs with small foreign-ownership shares.     

R&;D,trade, and productivity growth in korean manufacturing

This paper investigates the effects of both R&D spillovers and trade patterns on productivity in Korean manufacturing, using industry-level data. The results show that domestic and foreign R&D capital stocks played an important R&D in improving the total factor productivity of Korean manufacturing. Moreover, productivity is higher in export industries and the more open industries, and the effects of foreign R&D capital are stronger in the industries with large import shares or large intra-industry trade shares. JEL no. F10, O32, O47.     

Powerless: gains from trade when firm productivity is not Pareto distributed

Most trade models featuring heterogeneous firms assume a Pareto productivity distribution, on the basis that it provides a reasonable representation of the data and because of its analytical tractability. However, recent work shows that the characteristics of the productivity distribution crucially affect the estimated gains from trade. This paper thoroughly compares the gains from trade obtained under three different productivity distributions (Pareto, lognormal, and Weibull) and investigates their policy implications. We find that both the magnitude of the welfare gains and the relative importance of the fixed versus variable trade costs change significantly. Hence, relying blindly on a single distribution is dangerous when performing trade policy analysis.