Productivity and Firm Dynamics

Creative Destruction in Indonesian Manufacturing, 1994–2000

Bibliographic Data

ID8416183
AuthorsJan ter Wengel (Pontificia Universidad Javeriana), Edgard R Rodríguez (Carleton University)
Year2006
Volume42
Issue3
Pages341-355
Publication date2006-12-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueBulletin of Indonesian Economic Studies (JOURNAL)
Journal identifiersISSN: 0007-4918 • E-ISSN: 1472-7234
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00074910601053219
OpenAlexW2004666416
LanguageEN
Citations received2
References cited16

This paper examines the entry and exit, and the labour productivity, of Indonesian manufacturing firms with 20 workers or more, using a firm-level panel dataset constructed for the years 1994–2000. Overall change in manufacturing labour productivity reached 27.2%—an average growth of 3.5% per annum—between 1994 and 2000, a period that includes the 1997–98 Asian financial crisis, which hit Indonesia hard. Vibrant firm dynamics characterised this period, in which about 10% of manufacturing enterprises were renewed in any one year. By 2000, one-third of all enterprises in existence in 1994 had closed, but the number of enterprises that closed was lower than the number that entered and survived up to the year 2000. The replacement of exiting firms with newly entering firms contributed significantly to increases in overall labour productivity. Regulatory reform in support of this process should lead to gains in productive employment for Indonesian workers

Business · Demographic economics · Economic growth · Economics · Indonesian · Labour economics · Manufacturing · Productivity · Firm Innovation and Growth · Global trade and economics · Labor market dynamics and wage inequality · Marketing

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