Resource Allocation, Structural Change, and the Dynamics of Manufacturing Productivity in Indonesia

Chih Hai Yang; Chao Jing Yang; Chung Yueh Chiu; Hsuan Yu Lin

doi:10.1111/deve.12185

Resource Allocation, Structural Change, and the Dynamics of Manufacturing Productivity in Indonesia

Chih Hai Yang, Chao Jing Yang, Chung Yueh Chiu, Hsuan Yu Lin

Department of Economics

Research output: Contribution to journal › Article › peer-review

3 Scopus citations

Abstract

This paper analyzes productivity growth and its sources in the Indonesian manufacturing sector during the post-Asian financial crisis period. Based on a plant-level panel dataset over the period 2001–9, we find meager total factor productivity (TFP) growth in this country's manufacturing industries, merely achieving average annual growth of 0.03%, while TFP growth varies significantly across industries. Further decomposition suggests the need to effectively allocate resources across industries in order to promote aggregate productivity. Moreover, aggregate productivity growth coming from the total reallocation effect remains quite low, lending no support to the structural-bonus hypothesis. Overall, TFP growth is mainly contributed by incumbents firms, whereas the contribution by firm mobility was larger in some years.

Original language	English
Pages (from-to)	297-327
Number of pages	31
Journal	Developing Economies
Volume	56
Issue number	4
DOIs	https://doi.org/10.1111/deve.12185
State	Published - Dec 2018

Keywords

Indonesia
Productivity
Resource allocation
Structural bonus

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10.1111/deve.12185

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title = "Resource Allocation, Structural Change, and the Dynamics of Manufacturing Productivity in Indonesia",

abstract = "This paper analyzes productivity growth and its sources in the Indonesian manufacturing sector during the post-Asian financial crisis period. Based on a plant-level panel dataset over the period 2001–9, we find meager total factor productivity (TFP) growth in this country's manufacturing industries, merely achieving average annual growth of 0.03%, while TFP growth varies significantly across industries. Further decomposition suggests the need to effectively allocate resources across industries in order to promote aggregate productivity. Moreover, aggregate productivity growth coming from the total reallocation effect remains quite low, lending no support to the structural-bonus hypothesis. Overall, TFP growth is mainly contributed by incumbents firms, whereas the contribution by firm mobility was larger in some years.",

keywords = "Indonesia, Productivity, Resource allocation, Structural bonus",

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AU - Yang, Chih Hai

AU - Yang, Chao Jing

AU - Chiu, Chung Yueh

AU - Lin, Hsuan Yu

PY - 2018/12

Y1 - 2018/12

N2 - This paper analyzes productivity growth and its sources in the Indonesian manufacturing sector during the post-Asian financial crisis period. Based on a plant-level panel dataset over the period 2001–9, we find meager total factor productivity (TFP) growth in this country's manufacturing industries, merely achieving average annual growth of 0.03%, while TFP growth varies significantly across industries. Further decomposition suggests the need to effectively allocate resources across industries in order to promote aggregate productivity. Moreover, aggregate productivity growth coming from the total reallocation effect remains quite low, lending no support to the structural-bonus hypothesis. Overall, TFP growth is mainly contributed by incumbents firms, whereas the contribution by firm mobility was larger in some years.

AB - This paper analyzes productivity growth and its sources in the Indonesian manufacturing sector during the post-Asian financial crisis period. Based on a plant-level panel dataset over the period 2001–9, we find meager total factor productivity (TFP) growth in this country's manufacturing industries, merely achieving average annual growth of 0.03%, while TFP growth varies significantly across industries. Further decomposition suggests the need to effectively allocate resources across industries in order to promote aggregate productivity. Moreover, aggregate productivity growth coming from the total reallocation effect remains quite low, lending no support to the structural-bonus hypothesis. Overall, TFP growth is mainly contributed by incumbents firms, whereas the contribution by firm mobility was larger in some years.

KW - Indonesia

KW - Productivity

KW - Resource allocation

KW - Structural bonus

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EP - 327

JO - Developing Economies

JF - Developing Economies

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ER -

Resource Allocation, Structural Change, and the Dynamics of Manufacturing Productivity in Indonesia

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Keywords

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