Firms' responses to foreign demand shock: the Indonesian manufacturing firms in the aftermath of the global financial crises

Crawford School of Public Policy
Photo by ILO Asia-Pacific on Flickr

Event details

PhD Seminar (Econ)

Date & time

Friday 05 November 2021


Online via Zoom


Sulistiyo K. Ardiyono

Aggregate level studies have acknowledged the declining role of Indonesia’s export-oriented manufacturing sector in creating jobs in Indonesia. The industry’s employment insensitivity to foreign demand shock, in addition to the economy’s small exposure to the global market, explains the mild effect of the Global Financial Crises (GFC). This firm-level study shows that every 10 per cent rise in exports increases the sectors’ total workers by around 0.08 per cent or lower for more capital intensive firms. Further, the inter-related adjustments of labour, capital, material input, and utilisation rate in Indonesia’s manufacturing sector are explained, proving that the sector’s alterations on employment are not independent of intermediate and capital input. The results are robust when external and internal instruments are used in the control function and the GMM estimation, respectively.

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