Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 0007491032000142818

(1)

Full Terms & Conditions of access and use can be found at

http://www.tandfonline.com/action/journalInformation?journalCode=cbie20

Download by: [Universitas Maritim Raja Ali Haji] Date: 19 January 2016, At: 20:21

Bulletin of Indonesian Economic Studies

ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20

Abstracts of doctoral theses on the Indonesian

economy

To cite this article: (2003) Abstracts of doctoral theses on the Indonesian economy, Bulletin of Indonesian Economic Studies, 39:3, 363-368, DOI: 10.1080/0007491032000142818

To link to this article: http://dx.doi.org/10.1080/0007491032000142818

Published online: 03 Jun 2010.

Submit your article to this journal

Article views: 81

(2)

Note from the Editor

As a service to readers, we have decided regularly to publish abstracts of recently completed doctoral theses on the Indonesian economy. The intention is to bring significant new research in this field, and the authors of such work, to the notice of readers soon after theses have been examined and accepted.

New PhDs are strongly encouraged to submit thesis abstracts of about 500 words for publication in this series. Abstracts must be in English, although the the-sis itself may be written in any language. The subject must be economics in Indone-sia, widely interpreted to include fields such as economic history and economic geography; comparative country studies that focus particularly on Indonesia are also acceptable. Theses must have been accepted to be eligible.

Submissions should include the name and contact details of the student’s super-visor (not for publication) to allow confirmation of eligibility. They should indicate the year of acceptance of the thesis, the name of the conferring institution and the author’s e-mail address, and should be sent to editor.bies@anu.edu.au.

Readers, especially former advisers of doctoral candidates, are kindly requested to bring this series to the attention of new PhDs, or to advise the editor if they are aware of recently completed theses that may be suitable for inclusion.

The first collection of these abstracts appears below.

ABSTRACTS OF DOCTORAL THESES

ON THE INDONESIAN ECONOMY

What kinds of behaviour will a manu-facturing firm exhibit when it is faced with exchange rate volatility? If it is rational, it will switch its sales from the domestic to the export market under currency depreciation, and do the con-verse under currency appreciation. It will also switch its procurement of inputs from imports to the domestic market under depreciation. Adopting Indonesia’s economic crisis from 1997 to 1999 as a case study, this thesis exam-ines whether such forms of switching behaviour were observed in firms,

whether this behaviour resulted in increased output, and what factors caused such switching behaviour.

Switching behaviour on sales tar-gets between the domestic and export market is defined as ‘primary switch-ing’ and that on the procurement of inputs between the import and domestic market as ‘secondary switch-ing’. The paper is composed of a theo-retical framework and econometric analysis of switching behaviour, using industrial and trade statistics from the central statistics agency (BPS).

The Impact of the Economic Crisis on the Manufacturing Sector in Indonesia: Switching Decisions under Exchange Rate Volatility

Masami Ishida (ishidam@ide.go.jp) Accepted 2003, University of Indonesia

(3)

364 Abstracts of Doctoral Theses on the Indonesian Economy

In the theoretical framework, it is demonstrated mathematically that whether optimised production in-creases or dein-creases under currency depreciation depends on the relative strength of positive factors (composed of export orientation and scale of pri-mary and secondary switching) and of negative factors (dependence on im-ported inputs). The probit model analysis of whether output increased or decreased from 1996 to 1998 shows positive effects of export orientation, defined as the ratio of exports to out-puts in 1996. The same analysis from 1996 to 1999 demonstrated negative effects of dependence on imported inputs, defined as the ratio of imported inputs to all inputs in 1996, and posi-tive effects of the competiposi-tive real exchange rate as well as of export ori-entation.

Additional hypotheses are tested through econometric analysis, namely that an export-oriented firm can more easily carry out primary switching, and that a firm with less dependence on imported inputs can more easily carry out secondary switching. These hypotheses are also tested using probit model analysis on whether firms in a sector carried out primary switching and/or secondary switching. Samples of sectors are then selected endoge-nously by probit model analysis of pri-mary and secondary switching. In other words, the samples are divided into two groups, one that was success-ful in such switching and one that was not. With each truncated sample, the outputs of all sample sectors are estimated using Heckman’s two stage estimation, with the real exchange rate, GDP and real world imports as explanatory variables.

Unexpectedly, the results show that export orientation had negative im-pacts on primary switching behaviour

from 1996 to 1999. For firms in many less export-oriented sectors, those mainly in heavy industries succeeded in increasing exports by launching export drives, but most failed to increase output. Dependence on imported inputs positively affected secondary switching from 1996 to 1998. This may be because firms that depended heavily on imported inputs waited for exchange rate recovery before placing new orders, or because less dependent firms failed to procure domestically produced inputs because the domestic supplier launched an export drive. On the other hand, dependence on imported inputs nega-tively affected secondary switching from 1996 to 1999. This does not reflect successful switching behaviour during this period, however; rather it reflects the fact that firms with greater depend-ence on imported inputs, mainly in heavy industries, increased output while importing more inputs.

In comparing switching behaviour from 1996 to 1998 and from 1996 to 1999, the results of the latter exercise yield more supportive results for the hypotheses. For example, sectors with more competitive real exchange rates and less dependence on imported inputs succeeded in primary switch-ing, and the more labour-intensive sec-tors succeeded in secondary switching. These correlations reflect the time needed for adjustment. In other words, it took time for the effects of the switching behaviour to become clear.

Finally, as a policy implication, this study concludes that it is important to promote export orientation and reduce dependence on imported inputs. In particular, it would be desirable to see improvements in heavy industries that are more dependent on imported inputs and less export oriented.

(4)

This study discusses small- and medium-scale enterprises (SMEs) and subcontracting in the context of eco-nomic development in contemporary Indonesia. The main questions are whether and how SMEs have con-tributed to economic development, how and why subcontracting linkages between SMEs and large-scale enter-prises (LEs) have been (or have not been) established and developed, and whether and how subcontracting can be beneficial to SME development. In addressing these questions, the study analyses Indonesian manufacturing industry, particularly the machinery industry, primarily on the basis of firm-level data and information obtained from an interview and ques-tionnaire survey, with reference to Japan’s historical experience.

After setting out the research frame-work, the first part of this study reviews the development of SMEs and subcontracting systems in Japan dur-ing the twentieth century to extract the essence of their experience. The thesis then examines SME development in Indonesia and its contribution to the economy, presenting an overview of the Indonesian economy, manufactur-ing industry and SMEs, together with nationwide statistical data on several indicators and on productivity growth by firm size.

In the second part of the study, micro-level evidence obtained from sample firms in the automobile, motor-cycle, agricultural machinery and bi-cycle subsectors is used to compensate for the lack of data related to sub-contracting. The firm-level survey first

investigates what kinds of external resources metalworking and machin-ery SMEs have used as support mech-anisms, and how useful such resources are for SMEs in developing their tech-nological, marketing and financing capabilities. Next, production func-tions and indices of total factor pro-ductivity (TFP) are estimated to exam-ine whether subcontracting linkages with large-scale enterprises enabled SMEs to improve their productivity. Thereafter, qualitative data from the firm-level survey are used to explain how and why subcontracting linkages are established and can be crucial to SME development. The study then explores the detailed characteristics of subcontracting ties in Indonesia from the perspective of large firms.

The results of this study confirm that subcontracting linkages with LEs generally enabled SMEs in both Japan and Indonesia to alleviate some constraints stemming from their lim-ited internal resources, to improve their capabilities and production effi-ciency, and to contribute to economic development. Provision of technologi-cal and marketing support mecha-nisms and improvement of production efficiency are the major gains that SMEs obtained from subcontracting transactions with LEs. Subcontracting systems in the Indonesian machinery industry have developed as a vertical production mode and can be beneficial to the development of SMEs.

SME Development and Subcontracting in Indonesia: A Comparison with Japan's Historical Experience

Mitsuhiro Hayashi (mhayashi@ngu.ac.jp) Accepted 2002, The Australian National University

(5)

Several East Asian newly industri-alised countries have undergone a rapid and, by some accounts, remark-ably successful process of industriali-sation. The internationalisation of the electronics industry has played a cen-tral role in this process. A range of studies have documented how eco-nomic development in various Asian countries came about by effectively combining local learning efforts on the part of both governments and firms with foreign sources of technology and access to foreign markets. The process was one of gradual and concerted development of institutional and organisational structures and produc-tive capacities.

The electronics industry in Indone-sia, about which surprisingly few stud-ies have been conducted to date, expanded very fast during the 1990s, and faster than those in most other East Asian countries. The expansion can be ascribed to a combination of push and pull factors, but it has been propelled primarily by foreign invest-ment. This stands in contrast to coun-tries such as South Korea and Taiwan where capital formation in the elec-tronics industry was primarily local.

Against this backdrop, the current project emanated from curiosity about the developmental impact upon Indonesian electronics manufacturers of the recent rapid growth of the indus-try. The project is delimited by looking specifically at development of techno-logical capability, the ability to acquire, use, modify and develop technology, as a measure of developmental impact.

The research problem then is to analyse the character of technological capability, particularly of domestic companies; how such capability is developed; and how we might account for the observed patterns of capabili-ties and capability development.

To this end, a representative nation-wide empirical survey of electronics manufacturers in Indonesia was con-ducted, using a combination of quanti-tative and qualiquanti-tative techniques. In the process it was found that existing knowledge about the industry was limited, and appeared even to be inac-curate in some respects. Among the most important findings are the identi-fication and description of a larger number of qualitatively different types of electronics manufacturers than was previously recognised. The technologi-cal capabilities and the ways capabili-ties are developed are analysed in detail for each type of company. Fur-thermore, six qualitatively different ways of developing capabilities—six ‘development modes’—are identified. Another interesting finding is that the domestic manufacturers do not appear to be as weak as prior studies suggest. By distinguishing systematically between domestic and foreign compa-nies, the study also found pronounced segmentation in the industry, manifest at multiple levels—policy, institutions, firms and supporting industries. Drawing on a range of institutional approaches to economic activity, the thesis formulates and discusses a the-ory of industrial organisation, dubbed

embedded flexible collaboration. It applies

Embedded Flexible Collaboration and Development of Technological Capability: A Case Study of the Indonesian Electronics Industry

Peter Gammeltoft (pg.ikl@cbs.dk) Accepted 2001, Roskilde University, Denmark

(6)

This study attempts to elucidate the determinants of trade protection over time, together with inter-industry vari-ations of protection in the Indonesian manufacturing sector.

It draws on the political economy of protection literature, which has so far focused only on the developed coun-tries, and includes some modifications to portray a model specification more suitable to the Indonesian context. For the determinants of trade protection over time a political economy model for Indonesia is established and its inferences tested using a vector auto-regression analysis. This model elabo-rates the relationship between the average tariff and economic variables such as the real oil price and the real exchange rate. As for inter-industry variations of protection within the manufacturing sector, three principal models are employed: the interest group model, the national policy model, and the Grossman and Help-man model. In order to supplement and enrich understanding of the deter-minants of trade protection in the man-ufacturing sector, the thesis includes

case studies of the Indonesian automo-tive and textiles industries.

The study results in several key findings. First, there is a positive rela-tionship between trade protection and the real oil price, suggesting that pres-sure for import protection tended to increase during the oil boom. The econometric results also show that depreciation of the real exchange rate indirectly protects domestic goods from imports, leading to less pressure for import protection.

Second, there were at least six major groups influencing economic policy in Indonesia: technocrats, economic nationalists, interest groups (business associations), foreign firms, external institutions and the liberal epistemic community. Economic nationalists played a dominant role in the oil boom period of 1973–81. However, following the collapse of the oil price, the role of the technocrats became increasingly important, particularly between 1985 and 1990. They tended to place more emphasis on market determination of relative prices. At the same time, the role of crony capitalists around this theory to the actual organisation of

the industry and to the six empirically established ‘development modes’, and argues that the segmentation observed is likely to impede domestic capability formation in the areas of flexibility, domestic accumulation processes, technology transfer and innovation.

To account properly for the observed patterns of technological capability and organisation of the industry it was

nec-essary to venture into the broader insti-tutional system of which the industry is a part, and even further into the politi-cal economy and more distant institu-tional context of Indonesian society. In more general terms, the attempt to account for capability and capability formation at the firm level required the application of a broad and holistic insti-tutional perspective.

The Political Economy of Manufacturing Protection in Indonesia 1975–1995 Muhammad Chatib Basri (dede@lpem-feui.org)

Accepted 2001, The Australian National University

(7)

Soeharto also became increasingly important, and interest groups began to have an impact.

Third, the econometric results show that inter-industry variations in protec-tion in the manufacturing sector were not simply random in nature. In 1975, trade protection policy was influenced by national policy preferences in rela-tion to social concerns and to develop-ing the manufacturdevelop-ing sector, whereas for 1986, 1987 and 1995, trade protec-tion was influenced mainly by Soe-harto’s crony capitalists and interest groups.

Fourth, in the case of the automotive industry there is evidence that the causality between rent-seeking and trade protection worked both ways: rent-seekers caused trade protection and vice versa. These results imply that both the interest group model and the national policy model are relevant in explaining the pattern of protection

in the automotive industry in 1975–95. In contrast to the popular political economy studies on rent-seeking in Indonesia, which argue that economic policy (including trade policy) was very much state-centred, the case stud-ies indicate that the role of major local business players, business associa-tions, foreign principals and multi-lateral institutions was relatively strong in determining trade protection policy in the automotive industry.

Fifth, the case study in the textiles industry shows that the relatively low level of trade protection after the mid 1980s was a result of bargaining and conflict between interest groups in upstream and downstream industries. As a result, when the government lib-eralised the trade regime, there was no strong and coherent pressure for trade protection. In addition, there is evi-dence that the allocation of export quo-tas attracted rent-seeking activity.