Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 216: Productivity Growth in Indonesia: The Role of Regional Characteristics and Direct Foreign Investment

Fredrik Sjöholm ()
Additional contact information
Fredrik Sjöholm: The European Institute of Japanese Studies, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: Using detailed micro data from the Indonesian manufacturing sector, we examine the effect on productivity growth of different regional characteristics and direct foreign investment. The results suggest that a diversified regional industry sector increase productivity growth. Direct foreign investment benefits establishments in neighbouring industries within the region. There are intra-industry spillovers from direct foreign investment at a national level, but there does not seem to be a geographic component in this type of spillovers.

Keywords: Indonesia; regional development; direct foreign investment; spillovers; productivity

JEL-codes: F23; O12; R11

42 pages, January 14, 1998

Note: Revised version forhtcoming in Economic Development and Cultural Change (jan, 1999).

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