Indonesia's Ascent on the Technology Ladder: Capital Stock and Total Factor Productivity in Indonesian Manufacturing, 1975–95

This paper presents new capital stock estimates for mium and large-scale manufacturing in Indonesia using the Perpetual Inventory Method. Capital stock grew gradually during 1975–88, at an annual rate of 7.6%, then boomed during 1989–95 at 13.6% per annum. Growth accounting shows that 60% of the rapid growth of manufacturing output during the period 1975–95 was due to capital input growth, 18% to labour input growth and the remaining 22% to total factor productivity (TFP) growth. There is no evidence of a shift of factor inputs towards more efficient industries. TFP growth averaged 3% annually in 1975–95. Performance varied greatly across industries, but the policy changes that have taken effect since 1986 have definitely been beneficial for all industries. Put in an international perspective, however, Indonesia's TFP levels show no signs of catch-up with the world frontier.     

Concentration in Indonesia Manufacturing, 1975–93

This paper analyses trends and levels of industrial concentration in 102 Indonesian industries between 1975 and 1993. There was a long-term decline in industrial concentration across the manufacturing sector over this period. The simple average four-firm concentration ratio declined from 64% in 1975 to 54% in 1993, while the percentage of industries classified as highly concentrated fell from 39% in 1975 to 28% in 1993. Allowing for foreign trade substantially reduces average concentration measures: in 1993 the average concentration of a sample of 67 industries was 53% without adjustment for foreign trade, but 41% if foreign trade was allowed for. Thus, competition is stronger in Indonesian markets than domestic concentration ratios would suggest.     

Climbing the Technology Ladder Too Fast? New Evidence on Comparative Productivity Performance in Asian Manufacturing

This paper attempts to shed new light on the debate about the sources of rapid growth in Asian manufacturing. For the period from 1963 to 1997, a comparison of productivity levels in India, Indonesia, South Korea, and Taiwan with the United States as the reference country is provided. Using the industry-of-origin approach to international comparisons, varying development patterns are found for seven major manufacturing branches. Nevertheless, for all branches gaps in relative labor productivity and total factor productivity with the United States appeared to be big. Based on a technology ladder model, it is argued that low productivity might be due to rapid introduction of new technologies, leaving little time for efficient assimilation. J. Japan. Int. Econ., March 2002, 16(1) pp. 50–72. Groningen Growth and Development Center, Faculty of Economics, University of Groningen, Groningen, the Netherlands. © 2002 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: N15, 047, 057.     

State-led Catching up Strategies and Inherited Conflicts in Developing the ICT Industry: Behind the US–East Asia Semiconductor Disputes

Abstract

Moving from labour to some capital and knowledge intensive sectors, East Asian countries have actively pursued strategic industrial policies and successfully promoted targeted sectors. However, their growth in high tech sectors challenged the US leadership and the World Trade Organization (WTO)-supported neo-liberal development “wisdom”. Tensions over trade and technology issues eventually exploded into fierce policy conflicts. This study explores the role of the state in a single information and communication technology (ICT) sector, the semiconductor industry, over the course of its evolution in Japan, Korea, Taiwan and China. It is hoped to tackle the issues surrounding the conflicts between the Western economic orthodoxy and East Asian development policies through explaining the ICT development pathway of these countries. The finding shows that the international frictions in both ICT trade and technology were inevitable and reflect the divergence of development visions held by latecomers and developed countries.     

Deflation,Productivity Shocks and Gold: Evidence from the 1880–1914 Period

In this paper we examine the sources and impact of deflation on the growth experiences of the four dominant countries on the gold standard in the period 1880–1913: the United States, The United Kingdom, France and Germany. We distinguish between good deflation, (driven by positive aggregate supply shocks) and bad deflation (driven by aggregate demand shocks). We use an empirical Blanchard/Quah model which decomposes the behaviour of prices, output and the money stock into the impact of shocks such as a world price level shock, a domestic supply shock, and domestic demand shocks including a shock to the domestic gold stock. Our key finding is that the European economies were essentially classic in the sense that output was mainly supply driven and that money was neutral even when country specific gold stocks are included. In the United States, however, we observe both good and bad deflation.     

Wealth and credit in the Finnish countryside, 1850–1910

Abstract

In Finland, the early phase of industrialisation, that period of transition when trade and industry began to assume modern form, commenced around the middle of the nineteenth century. A legislative programme of economic liberalism was implemented: steam sawmills were permitted, the customs system reformed, foreign trade freed from controls and rural trade allowed. The supply of credit to farming was eased by the mortgage credit institute. The Free Trade Act of 1879 was based on completely free entrepreneurial activity. These measures, together with exogenous economic factors, stimulated new economic and intellectual forces.¹     

Designing wartime economic controls: Productivity and firm dynamics in the Japanese cotton spinning industry, 1937–9

In 1937, the Japanese government accelerated the expansion of its military expenditure and began to impose controls on the economy to maintain the balance of international payments. The controls were developed through trial and error. The cotton spinning industry was one of the industries most deeply affected by these controls. Initially, the government simply reduced the allocation of foreign exchange for raw cotton imports. However, because this measure prevented the export of cotton products, especially to countries outside the yen bloc, a new scheme of control, the ‘export–import link system’, was adopted from the second half of 1938. This scheme was intentionally designed to give firms incentives to export to non-yen bloc countries and to incorporate elements of market mechanisms into the system of economic controls. Analysing firm-level data, we find that under the link system, firms with higher labour productivity (LP) tended to grow faster, as occurs under a market economy. This relationship was not observed during the early stage of the controls. This difference is reflected in the pattern of change in aggregate LP. Under the export–import link system, the positive reallocation effect was substantial, similar to a market economy, whereas it was almost zero under the early controls. These findings indicate that the design of controls matters for the performance of controlled economies.     

Camilla Josephson,Growth and Business Cycles: Swedish Manufacturing Industry 1953–2001

Abstract

Danish historians, like those of other countries, have increasingly devoted their attention in the 20th century to the study of the economic and social aspects of historical evolution, in the belief that these aspects are of fundamental importance to the understanding of political and cultural history—indeed to the deeper understanding of the whole course of history. At present, however, the only complete account of the history of economic life in Denmark is one which appeared in a German series dealing with a number of different European countries. The series included Französische Wirtschaftsgeschichte by Henri Sée, Holländische Wirtschaftsgeschichte by E. Baasch, Norwegische Wirtschaftsgeschichte by O. A. Johnsen, and Allgemeine Wirtschaitsgeschiclite by E. Kulischer.     

Deskilling and decline in skill premium during the age of sail: Swedish and Finnish seamen, 1751–1913

The study examines the evolution of skill premium and share at industry level in shipping during the age of sail. We argue that the period from the 1750s to the 1910s represented deskilling for the seamen working in sailing ships. The growth of international trade and shipping during the first era of globalization increased the overall demand for sailors but decreased the relative demand for skilled labor in favor of less skilled ones. This deskilling was associated with a decline in wage inequality, as the premium for high skilled seamen fell relative to mean wages in the shipping industry. The decline in skill premium may have facilitated the growth of trade and shipping, as the relative costs of transport declined. This in turn might have hastened the first era of globalization.     

The building up of new imbalances in China: the dilemma with ‘rebalancing’

This paper offers a theoretical basis for the concept of rebalancing and applies it to China, where it is currently a topical issue. Rebalancing here means the correction of economic and social imbalances built up during industrialization. This correction is accompanied by a structural transformation towards a more inward- and consumption-driven growth path, associated with growth slowdown. Attempts to mitigate this growth slowdown by either retarding this structural reform process or by using expansionary stimulus programmes as done over the past decade in China create new imbalances that have to be corrected (rebalanced) again. Managing these multiple rebalancing tasks together is a tremendous undertaking, as this paper shows.     

Technology transmission in pre-modern China: Evidence from a Chinese clan, 1400–1800

This study examines the intergenerational transmission of technology in historical China by constructing a genealogy dataset of the Huang family from 1400 to 1800. The family specialised in woodblock carving for book production, and their names were documented in these volumes, enabling measurement of technological output. Analysing 902 individuals across 16 generations reveals that carving skills were primarily transmitted from fathers to sons, with little influence from other family members or external artisans. Moreover, the production of books by the Huang family experienced a decline in the early 17th century, potentially attributed to weather shocks and decreased demand for books.     

Balancing the Baltic trade: colonial commodities in the trade on the Baltic, 1773–1856

Abstract

This article attempts to look at the connection between the Atlantic and the Baltic economies during the transition from early modern to the modern era. Previous research has seriously underestimated the importance of colonial commodities traded on the Baltic during this period. Colonial commodities, particularly from the American plantation complex, became ever more important for the Western European balance of payments on the Baltic. Already by the late eighteenth century, these commodities were on aggregate worth approximately as much as the exports of strategic commodities such as grains or iron from the Baltic at the same time. By the middle of the nineteenth century, the value of colonial commodities imported to the region far surpassed the value of such key exports from the Baltic. The colonial commodities thus constituted an important part of the balance of payments for the trade on the Baltic.     

Academic Anti-Semitism and the Austrian School: Vienna, 1918–1945

The theme of academic anti-Semitism has been widely discussed recently in histories of the interwar period of the University of Vienna, in particular its Faculty of Law and Policy Sciences. This paper complements these studies by focusing on the economics chairs of this faculty and, more generally, on the fate of the younger generation of the Austrian School of Economics. After some introductory remarks the paper concentrates on three case studies: the neglect of Mises in all three appointments of economics chairs in the 1920s; the anti-Semitic overtones in the conflict between Hans Mayer and Othmar Spann, both professors of economics in the faculty; and on anti-Semitism as a determinant of success or failure in academia, and consequently of the emigration of Austrian economists. Finally, we have a short look at the development of economics at the University of Vienna during and after the Nazi regime.     

Supervision without regulation: Discount limits at the Austro–Hungarian Bank, 1909–13

We show that nineteenth century central banks could use credit limits for discount loans as a means to enforce supervisory standards long before they had any formal regulatory powers. Drawing on novel microdata from the Austro–Hungarian Bank's archives, we document that credit limits were continuously monitored and that their size was contingent on counterparties’ liquidity and capital position. Counterparties had an economic motive to abide by informal prudential ‘rules of the game’: higher credit limits enabled counterparties to streamline their day-to-day liquidity management. We exploit the heterogeneous exposure of counterparties to an exogenous liquidity shock to evidence that the Bank relaxed credit limits during crises to fulfil its role as a lender of last resort.