Publication:
The Role of Imported Intermediate Inputs in the Indonesian Economy

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dc.contributor.authorRahardja, Sjamsu
dc.contributor.authorVarela, Gonzalo J.
dc.date.accessioned2015-12-23T15:54:47Z
dc.date.available2015-12-23T15:54:47Z
dc.date.issued2015-04
dc.description.abstractThe recent emergence of a persistent deficit in Indonesia s trade balance has triggered concerns over reliance on imports. Notably, imports of intermediate inputs and capital goods have been on the rise over the last decade. Apart from firms partaking in the emergence of global production networks, firms imported intermediates for various reasons, including value, variety, and quality. Concerns may arise about the impact that an increase in reliance on imported inputs may have on domestic jobs, and value added. A careful examination of sector and firm level data from the Indonesian manufacturing sector reveals that: (1) the growth of intermediates imports roughly matches the growth of Indonesian GDP, implying a relatively stable reliance on imported inputs. (2) Users of imported inputs in Indonesia are exceptional performers: they grow faster in terms of output, value added and employment, they are more productive, and they pay higher wages. (3) The increased availability of imported inputs has contributed to improved product quality in Indonesian manufacturing. Larger shares of imported inputs in total inputs, as well as lower tariffs on inputs, are associated with a higher probability of producing high quality goods. (4) Firms product diversification processes have been boosted by lower tariffs on inputs, and by increased usage of imported versions. In light of these results, this note argues that facilitating the import of intermediate products can help the Indonesian economy to diversify, avoid being stuck in low-skilled processing or around natural resource based manufacturing, and to climb up the value chain. Such an approach, however, is not sufficient in isolation and active policies are needed to increase firms absorptive capacities and workers skills.en
dc.identifierhttp://documents.worldbank.org/curated/en/2015/12/19789162/role-imported-intermediate-inputs-indonesian-economy-policy-note-iii
dc.identifier.doi10.1596/23509
dc.identifier.urihttps://hdl.handle.net/10986/23509
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Jakarta
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectTARIFFS
dc.subjectECONOMIC GROWTH
dc.subjectSUBSTITUTION
dc.subjectPRODUCTION
dc.subjectPRODUCTION CHAINS
dc.subjectTARIFF PROTECTION
dc.subjectSTOCK
dc.subjectEXPORT STRUCTURES
dc.subjectINVESTMENT POLICIES
dc.subjectTRADE BARRIERS
dc.subjectCONSUMER GOODS
dc.subjectLABOR FORCE
dc.subjectPROTECTIONIST
dc.subjectEXPORTS
dc.subjectDEVELOPING COUNTRIES
dc.subjectDOMESTIC MARKET
dc.subjectEXPORTERS
dc.subjectLEGAL STATUS
dc.subjectDISTRIBUTION
dc.subjectGROWING TRADE
dc.subjectVARIABLES
dc.subjectEXPORT DATA
dc.subjectPRICE
dc.subjectINPUTS
dc.subjectPRODUCT QUALITY
dc.subjectINTERMEDIATE PRODUCTS
dc.subjectPROTECTIONISM
dc.subjectIMPORT LICENSES
dc.subjectPRODUCTION PROCESS
dc.subjectFOREIGN MARKETS
dc.subjectDEVELOPMENT
dc.subjectTRADE BALANCE
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectIMPORTED INTERMEDIATE
dc.subjectDOMESTIC PRODUCERS
dc.subjectREDUCTION IN TARIFFS
dc.subjectDOMESTIC INPUTS
dc.subjectCOMPETITIVE EFFECTS
dc.subjectGLOBAL PRODUCTION
dc.subjectPRODUCTS
dc.subjectSURPLUS
dc.subjectPRODUCTIVITY
dc.subjectWORKERS’ SKILLS
dc.subjectINDUSTRIALIZATION
dc.subjectGLOBALIZATION
dc.subjectWORLD EXPORTS
dc.subjectMARKETS
dc.subjectPRIVATE INVESTMENT
dc.subjectTARIFF REDUCTIONS
dc.subjectIMPORT RESTRICTIONS
dc.subjectPRO-COMPETITIVE EFFECTS
dc.subjectACCESS
dc.subjectIMPORTS
dc.subjectPRODUCT
dc.subjectCONSUMER CHOICE
dc.subjectTRADE POLICIES
dc.subjectNON-TARIFF MEASURES
dc.subjectCOMPETITIVE PRESSURES
dc.subjectPRODUCT LEVEL
dc.subjectCONSUMPTION
dc.subjectHUMAN CAPITAL
dc.subjectVALUE ADDED
dc.subjectKNOWLEDGE SPILLOVERS
dc.subjectINTERNATIONAL PRODUCTION
dc.subjectSUBSTITUTE
dc.subjectTRAVEL
dc.subjectECONOMIC PERFORMANCE
dc.subjectWAGES
dc.subjectOWNERSHIP STRUCTURE
dc.subjectTRADE COSTS
dc.subjectPRODUCTIVITY INCREASES
dc.subjectMARKET PRICES
dc.subjectVALUE
dc.subjectCOMPETITIVENESS
dc.subjectDEMAND SHOCKS
dc.subjectPRODUCT DIFFERENTIATION
dc.subjectDEVELOPMENT STRATEGY
dc.subjectPRODUCTION NETWORKS
dc.subjectDEMAND
dc.subjectINTERMEDIATE GOODS
dc.subjectECONOMY
dc.subjectINPUT-OUTPUT TABLES
dc.subjectEMPLOYMENT GROWTH
dc.subjectOPENNESS
dc.subjectMARKET
dc.subjectBENCHMARK
dc.subjectTRADE LIBERALIZATION
dc.subjectSUPPLY CHAIN
dc.subjectTARIFF LEVELS
dc.subjectINTERNATIONAL NORMS
dc.subjectREGRESSION ANALYSIS
dc.subjectCAPITAL GOODS
dc.subjectDOMESTIC DEMAND
dc.subjectPRICE REDUCTIONS
dc.subjectTRADE
dc.subjectIMPORTED INPUTS
dc.subjectGDP
dc.subjectGOODS
dc.subjectINVESTMENT
dc.subjectTRANSPORT COST
dc.subjectCOMPARATIVE ADVANTAGE
dc.subjectIMPORTED INTERMEDIATES
dc.subjectBUSINESS ENVIRONMENT
dc.subjectTARIFF
dc.subjectSUPPLY
dc.subjectTRADE LIBERALIZATION PROCESS
dc.subjectCOMPETITIVE MARKETS
dc.subjectSTATISTICAL ANALYSIS
dc.subjectTOTAL OUTPUT
dc.subjectSUPPLIERS
dc.subjectINTERMEDIATE INPUTS
dc.subjectPRICES
dc.titleThe Role of Imported Intermediate Inputs in the Indonesian Economyen
dc.typeReporten
dc.typeRapportfr
dc.typeInformees
dspace.entity.typePublication
okr.date.disclosure2015-12-08
okr.date.doiregistration2025-05-07T09:42:08.521355Z
okr.doctypeEconomic & Sector Work::Policy Note
okr.doctypeEconomic & Sector Work
okr.docurlhttp://documents.worldbank.org/curated/en/2015/12/19789162/role-imported-intermediate-inputs-indonesian-economy-policy-note-iii
okr.guid683201468044359996
okr.identifier.externaldocumentum090224b083c3d487_2_0
okr.identifier.internaldocumentum19789162
okr.identifier.report89285
okr.importedtrue
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/12/09/090224b083c3d487/2_0/Rendered/PDF/The0Role0of0im0my00Policy0note0III0.pdfen
okr.region.administrativeEast Asia and Pacific
okr.region.countryIndonesia
okr.sectorIndustry and trade
okr.sectorPublic Administration, Law, and Justice :: Central government administration
okr.themeEconomic management :: Analysis of economic growth
okr.themeTrade and integration :: Export development and competitiveness
okr.themeTrade and integration :: Regulation and competition policy
okr.themeFinancial and private sector development :: Technology diffusion
okr.topicInternational Economics and Trade::Trade and Regional Integration
okr.topicInternational Economics and Trade::Trade Policy
okr.topicInternational Economics and Trade::Free Trade
okr.topicMacroeconomics and Economic Growth::Markets and Market Access
okr.unitTrade Compet - GP - IBRD (GTCDR)
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