Publication: Automation and Manufacturing Performance in a Developing Country
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2021-05
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2021-05-13
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This paper provides novel evidence on the economic impact of industrial automation in a large developing economy. It combines labor force survey and manufacturing plant-level data from Indonesia over 2008–15, when the country experienced a rapid increase in imports of robots. The findings show a positive impact of robots on various measures of plants’ performance and integration into global value chains. In contrast to existing evidence on advanced and emerging economies, these plant-level impacts result in an increase in manufacturing and services employment at the local level. Such employment effects are consistent with evidence of positive employment spillovers from downstream robot-adopting plants, which help extend the benefits of automation to non-adopting plants. The spillover effects may provide a rationale to incentivize manufacturing firms to adopt industrial robots. The results also suggest that the gains from automation are not equally shared: adoption of robots is associated with a reduction in the labor share in value added and an increase in skill wage premia.
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“Cali, Massimiliano; Presidente, Giorgio. 2021. Automation and Manufacturing Performance in a Developing Country. Policy Research Working Paper;No. 9653. © World Bank. http://hdl.handle.net/10986/35566 License: CC BY 3.0 IGO.”
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