Hallward-Driemeier, MaryRijkers, Bob2012-03-192012-03-192011-11-01https://hdl.handle.net/10986/3635Using Indonesian manufacturing census data (1991-2001), this paper rejects the hypothesis that the East Asian crisis unequivocally improved the reallocative process. The correlation between productivity and employment growth did not strengthen and the crisis induced the exit of relatively productive firms. The attenuation of the relationship between productivity and survival was stronger in provinces with comparatively lower reductions in minimum wages, but not due to reduced entry, changing loan conditions, or firms connected to the Suharto regime suffering disproportionately. On the bright side, firms that entered during the crisis were relatively more productive, which helped mitigate the reduction in aggregate productivity.CC BY 3.0 IGOACCOUNTINGADJUSTMENT PROCESSAGGREGATE PRODUCTIVITYAGGREGATE PRODUCTIVITY GROWTHALLOCATIVE EFFICIENCYAVERAGE PRODUCTIVITYAVERAGE PRODUCTIVITY GROWTHBANKING CRISESBANKSBUSINESS CYCLEBUSINESS CYCLESCAPITAL MARKETCOMPARATIVE ANALYSISCOMPARATIVE ECONOMICSCOMPETITIVE PRESSURECOMPETITIVENESSCONGLOMERATECONGLOMERATESCREATIVE DESTRUCTIONCRISESDEFLATORSDEMOCRACYDEVALUATIONDEVELOPMENT ECONOMICSDEVELOPMENT POLICYECONOMETRICSECONOMIC GROWTHECONOMIC INTEGRATIONECONOMIC RESEARCHEMPLOYEEEMPLOYMENTEMPLOYMENT GROWTHEMPLOYMENT TURNOVERENTREPRENEURSENTRY RATEEQUILIBRIUM UNEMPLOYMENTEXPANSIONEXPORTSFINANCIAL CRISESFINANCIAL CRISISFIRM DYNAMICSFIRM ENTRYFIRM EXITFIRM GROWTHFIRM PRODUCTIVITYFIRM SIZEFIRM SURVIVALFIRM TURNOVERFIRM-LEVEL ANALYSISGDPGROWTH MODELSINDUSTRIALIZATIONINFLATIONINFLATION RATESINTEREST RATESINVENTORIESJOB CREATIONJOB DESTRUCTIONJOB FLOWSJOB LOSSESJOBSLABOR DEMANDLABOR MARKETLABOR MARKET OUTCOMESLABOR MARKET REGULATIONLABOR MARKET REGULATIONSLABOR MARKETSLABOR REGULATIONLABOR REGULATIONSLIQUIDITYLOANMACROECONOMIC MODELSMACROECONOMICSMANUFACTURERSMANUFACTURING ESTABLISHMENTSMARKET FAILURESMINIMUM WAGEMINIMUM WAGESNET EMPLOYMENTOUTPUTSPREVIOUS SECTIONPREVIOUS WORKPRIVATE SECTORPRIVILEGED STATUSPRODUCTION FUNCTIONSPRODUCTIVE FIRMSPRODUCTIVITYPRODUCTIVITY DECOMPOSITIONSPRODUCTIVITY DIFFERENTIALPRODUCTIVITY GAPPRODUCTIVITY GROWTHPROFITABILITYRESOURCE ALLOCATIONSHAREHOLDERSSMALL FIRMSSOCIAL COSTSTOTAL OUTPUTUNSKILLED WORKERSUSE VALUEVALUE ADDEDWAGE LEVELSWORKERWorld Bank10.1596/1813-9450-5869