Article Sidebar

Submitted
September 26, 2020
Accepted
February 22, 2021
Published
July 3, 2021
Download
PDF
Statistic
Read Counter : 447 Download : 352

Downloads

Download data is not yet available.

Main Article Content

Abstract

This study examined the impact of service liberalization on manufacturing productivity firms in Indonesia through mode three (commercial presence) during 2006–2014. It used firm-level data sourced from the manufacturing census published by the Indonesian Bureau of Statistic (BPS). To address the problem of endogeneity in service reform, this research uses an Instrumental Variables (IV) estimation of the fixed-effect model variety and utilized two types of data (FDI and STRI OECD) to compare the result. The findings show that service liberalization in Indonesia has a positive impact on manufacturing productivity at the firm level. Furthermore, this study estimates each service sector (e.g., electricity, gas, and water; construction; transportation, warehouse, and telecommunication), the results indicated that each service had a significant impact on improving firm performance. This research suggests that reducing restrictions on the service market will improve manufacturing productivity.

Keywords

Manufacturing Productivity Service Liberalization

Article Details

License

Authors who publish with this journal agree to the terms:

Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

Creative Commons License

Jurnal Ekonomi Pembangunan is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License..

How to Cite
Oktabriyantina, W., & Panennungi, M. A. (2021). The Impact of Service Liberalization on Manufacturing Productivity in Indonesia. Jurnal Ekonomi Pembangunan, 19(1), 1–16. https://doi.org/10.29259/jep.v19i1.12613
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Aghion, P., & Braun, M. (2008). Competition and Productivity Growth in South Africa. Economics of Transition, 16(4), 741–768. https://doi.org/10.1111/j.1468-0351.2008.00336.x
  2. Allcott, H., Collard-Wexler, A., & O`Connell, S. D. (2016). How Do Electricity Shortages Affect Productivity ? Evidence from India. American Economic Review, 106(3), 587–624. DOI: 10.1257/aer.20140389
  3. Amiti, M., & Konings, J. (2007). Trade liberalization, intermedicate inputs, and productivity: evidence from indonesia. American Economic Review, 97(2003), 1611–1638. DOI: 10.1257/aer.97.5.1611
  4. Amiti, M., & Wei, S. J. (2009). Service offshoring and productivity: Evidence from the US. World Economy, 32(2), 203–220. https://doi.org/10.1111/j.1467-9701.2008.01149.x
  5. Arnold, J., Javorcik, B., Lipscomb, M., & Mattoo, A. (2012). Services Reform and Manufacturing Performance: Evidence from India. World Bank Policy Research Working Paper, January. https://doi.org/10.1111/ecoj.12206
  6. Arnold, Jens M., Javorcik, B. S., & Mattoo, A. (2011). Does services liberalization benefit manufacturing firms?. Evidence from the Czech Republic. Journal of International Economics, 85(1), 136–146. https://doi.org/10.1016/j.jinteco.2011.05.002
  7. Arnold, Jens Matthias, Mattoo, A., & Narciso, G. (2008). Services inputs and firm productivity in Sub-Saharan Africa: Evidence from firm-level data. Journal of African Economies, 17(4), 578–599.
  8. Arvanitis, S., & Loukis, E. N. (2009). Information and communication technologies, human capital, workplace organization and labour productivity : A comparative study based on firm-level data for Greece and Switzerland. Information Economics and Policy, 21, 43–61. https://doi.org/10.1016/j.infoecopol.2008.09.002
  9. Atrostic, B. K., Bureau, U. S. C., & Motohashi, K. (2004). IT, Productivity and Growth in Enterprises : Evidence from new international micro data. OECD Workshop on ICT and Business Performance, January.
  10. Bas, M. (2014). Does services liberalization affect manufacturing firms ’ export performance ? Evidence from India q. Journal of Comparative Economics, 42(3), 569–589. https://doi.org/10.1016/j.jce.2013.06.005
  11. Baumol, B. W. J., Anne, S. U. E., Blackman, B., & Wolff, E. N. (1985). Unbalanced Growth Revisited : Asymptotic Stagnancy and New Evidence. The American Economic Review, 75(4), 806–817.
  12. Bell, D. (1976). The coming of Post-Industrial Society. The Educational Forum, 40(4), 574–579. https://doi.org/10.1177/089692057400400303
  13. Bernard, A. B., Jensen, J. B., & Schott, P. K. (2006). Trade costs, firms and productivity. Journal of Monetary Economics, 53(5), 917–937. https://doi.org/10.1016/j.jmoneco.2006.05.001
  14. Beverelli, C., Fiorini, M., & Hoekman, B. (2017). Services trade policy and manufacturing productivity : The role of institutions. 104, 166–182. https://doi.org/10.1016/j.jinteco.2016.11.001
  15. Borchert, I., Gootiiz, B., & Mattoo, A. (2014). Policy barriers to international trade in services: Evidence from a new database. World Bank Economic Review, 28(1), 162–188.
  16. Boylaud, O., & Nicoletti, G. (2003). Regulation, market structure and performance in telecommunications. OECD Economic Studies, 2001/1(237), 99–142. https://doi.org/10.1787/18151973
  17. Crozet, M., Milet, E., & Mirza, D. (2016). The impact of domestic regulations on international trade in services: Evidence from firm-level data. Journal of Comparative Economics, 44(3), 585–607. https://doi.org/10.1016/j.jce.2015.11.004
  18. Demsetz, H. (1973). Industry structure, Market Rivalry, and public Policy. Law and Economics, 16(1), 1–9. https://doi.org/10.1086/466752
  19. Driscoll, J. C., & Kraay, A. C. (1998). Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics, 80(4), 549–559. https://doi.org/10.1162/003465398557825
  20. Duggan, V. (2016). Service Sector Reform and Manufacturing Productivity Evidence from Indonesia. World Bank Policy Research Working Paper No. 6349.
  21. Ethier, W. (1982). National and International Returns to Scale. The American Economic Review, 72(3), 389–405.
  22. Fernandes, A. M., & Paunov, C. (2012). Foreign direct investment in services and manufacturing productivity : Evidence for Chile ?. Journal of Development Economics, 97(2), 305–321. https://doi.org/10.1016/j.jdeveco.2011.02.004
  23. Francois, J. F. (1990). Producer Services,Scale, and the Division of Labor. Oxford Economic Papers, 42(4), 715–729.
  24. Francois, J., & Hoekman, B. (2010). Services Trade and Policy. Economic Literature, 48(3), 642–692. DOI:10.2307/20778764
  25. Gershuny, J. (1978). After Industrial Society: The Emerging Self-Service Economy. The MACMILLAN PRESS LTD London and Basingstoke.
  26. Giandrea, M. D., Cahill, K. E., Quinn, J. F. (2008). Self-Employment Transitions among Older American Workers with Career Jobs. Bls Working Papers, April, 38.
  27. Greenhalgh, C., & Gregory, M. (2001). Structural change and the emergence of the new service economy. Oxford Bulletin of Economics and Statistics, 63(SUPPL.), 629–646. https://doi.org/10.1111/1468-0084.63.spe1.2
  28. Hill, H., & Kalirajan, K. P. (1993). Small enterprise and firm-level technical efficiency in the Indonesian garment industry. Applied Economics, 25(9), 1137–1144. https://doi.org/10.1080/00036849300000174
  29. Javorcik, B. S., & Narciso, G. (2008). Differentiated products and evasion of import tariffs. Journal of International Economics, 76(2), 208–222. https://doi.org/10.1016/j.jinteco.2008.07.002
  30. Kasahara, H., & Rodrigue, J. (2008). Does the use of imported intermediates increase productivity ? 87, 106–118. https://doi.org/10.1016/j.jdeveco.2007.12.008
  31. Kox, H., & Rubalcaba, L. (2007). The contribution of business services to European economic growth. In Business Services in European Economic Growth (Issue February, pp. 74–94). https://doi.org/10.1057/9780230228795
  32. Kretschmer, T. (2012). Information and Communication Technologies and Productivity Growth: A Survey of the literature. OECD Digital Economy Papers, 195.
  33. Lanaspa, L., Sanz-Gracia, F., & Vera-Cabello, M. (2016). The (strong) interdependence between intermediate producer services’ attributes and manufacturing location. Economic Modelling, 57, 1–12. https://doi.org/10.1016/j.econmod.2016.04.010
  34. Markusen, J. R. (1989). Trade in producer services and in other specialized intermediate inputs. American Economic Review, 79(1), 85–95.
  35. Nickell, S. (1997). Unemployment and Labor Market Rigidities: Europe versus North America. Journal of Economic Perspectives, 11(3), 55–74.
  36. Pitt, M. M., & Lee, L. F. (1981). The measurement and sources of technical inefficiency in the Indonesian weaving industry. Journal of Development Economics, 9(1), 43–64.
  37. Tzelepis, D., Tsekouras, K., Skuras, D., & Dimara, E. (2006). The effects of ISO 9001 on firms’ productive efficiency. International Journal of Operations and Production Management, 26(10), 1146–1165. https://doi.org/10.1108/01443570610691111