Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia
Drawing on the findings of recent research, this note examines the extent to which changes to policy restrictions on foreign direct investment (FDI) in the Indonesian service sector affected the performance of downstream manufacturers during 1997-2...
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| Format: | Brief |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2013/02/17291077/can-open-service-sector-fdi-policy-enhance-manufacturing-productivity-evidence-indonesia http://hdl.handle.net/10986/17014 |
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okr-10986-170142021-04-23T14:03:33Z Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia Duggan, Victor Rahardja, Sjamsu Varela, Gonzalo ACCESS TO SERVICES ACCESSIBILITY ACCOUNTING AIR AIR TRANSPORT BUSINESS ACTIVITY BUSINESS ENVIRONMENT BUSINESS OPPORTUNITIES BUSINESS SERVICES CAPABILITIES COMMODITIES COMMUNICATIONS MEDIA CONFIDENCE DEVELOPING COUNTRIES DOMESTIC MARKET DOMESTIC PROVIDERS DRIVING DRIVING COSTS ECONOMIC DEVELOPMENT ELECTRICITY ENTERPRISE SURVEYS EQUIPMENT EXPORT MARKETS FINANCIAL SERVICES FOREIGN DIRECT INVESTMENT FOREIGN ENTRY FOREIGN EQUITY FOREIGN EXCHANGE FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN OWNERSHIP FOREIGN PARTICIPATION FREIGHT FREIGHT SECTOR GLOBAL MARKETPLACE GLOBAL TRADE GROSS DOMESTIC PRODUCT GROWTH RATE IMPORTANCE OF SERVICES INCREASED COMPETITION INNOVATION INSURANCE INTELLECTUAL PROPERTY INTERNATIONAL BUSINESS INTERNATIONAL TRADE LIBERALIZATION MANUFACTURING MANUFACTURING INDUSTRIES MARKET FAILURES MONOPOLIES MONOPOLY MULTINATIONALS OUTPUT PENSION PRIVATE SECTOR PRIVATE SECTOR INVESTMENT PRODUCTIVITY QUALITY OF SERVICES RADIO REAL ESTATE REGULATORY BODIES REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY REGIME REGULATORY RESTRICTIONS RESULT RESULTS ROAD SERVICE PROVIDERS SERVICE QUALITY SERVICE SECTOR SERVICE SECTORS SERVICES INPUTS SERVICES LIBERALIZATION SERVICES SECTOR TECHNOLOGY TRANSFER TELECOM TELECOMMUNICATIONS TELEVISION TRADE IN SERVICES TRADE POLICY REFORM TRANSPORT TRANSPORT SECTOR TRANSPORT SECTORS UNIVERSAL ACCESS USER USERS USES VEHICLES WORLD INVESTMENT REPORT WORLD TRADE Drawing on the findings of recent research, this note examines the extent to which changes to policy restrictions on foreign direct investment (FDI) in the Indonesian service sector affected the performance of downstream manufacturers during 1997-2009. The analysis uncovers two important findings: first, that relaxing restrictions toward FDI in service sectors was associated with improvements in the perceived performance of those sectors, and second, more importantly, that this relaxation accounted for 8 percent of the total observed increase in manufacturers' total factor productivity (TFP) during this period. The results show that these TFP gains accrue disproportionately to those firms that are relatively more productive and that gains are related to the relaxation of restrictions in the transport as well as the electricity, gas, and water sectors. TFP gains are associated, in particular, with the relaxation of foreign equity limits, screening and prior approval requirements, but less so with discriminatory regulations that prevent multinationals from hiring key personnel from abroad. 2014-02-12T16:05:19Z 2014-02-12T16:05:19Z 2013-02 http://documents.worldbank.org/curated/en/2013/02/17291077/can-open-service-sector-fdi-policy-enhance-manufacturing-productivity-evidence-indonesia http://hdl.handle.net/10986/17014 English en_US Economic premise;no. 106 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Brief Publications & Research East Asia and Pacific Indonesia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO SERVICES ACCESSIBILITY ACCOUNTING AIR AIR TRANSPORT BUSINESS ACTIVITY BUSINESS ENVIRONMENT BUSINESS OPPORTUNITIES BUSINESS SERVICES CAPABILITIES COMMODITIES COMMUNICATIONS MEDIA CONFIDENCE DEVELOPING COUNTRIES DOMESTIC MARKET DOMESTIC PROVIDERS DRIVING DRIVING COSTS ECONOMIC DEVELOPMENT ELECTRICITY ENTERPRISE SURVEYS EQUIPMENT EXPORT MARKETS FINANCIAL SERVICES FOREIGN DIRECT INVESTMENT FOREIGN ENTRY FOREIGN EQUITY FOREIGN EXCHANGE FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN OWNERSHIP FOREIGN PARTICIPATION FREIGHT FREIGHT SECTOR GLOBAL MARKETPLACE GLOBAL TRADE GROSS DOMESTIC PRODUCT GROWTH RATE IMPORTANCE OF SERVICES INCREASED COMPETITION INNOVATION INSURANCE INTELLECTUAL PROPERTY INTERNATIONAL BUSINESS INTERNATIONAL TRADE LIBERALIZATION MANUFACTURING MANUFACTURING INDUSTRIES MARKET FAILURES MONOPOLIES MONOPOLY MULTINATIONALS OUTPUT PENSION PRIVATE SECTOR PRIVATE SECTOR INVESTMENT PRODUCTIVITY QUALITY OF SERVICES RADIO REAL ESTATE REGULATORY BODIES REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY REGIME REGULATORY RESTRICTIONS RESULT RESULTS ROAD SERVICE PROVIDERS SERVICE QUALITY SERVICE SECTOR SERVICE SECTORS SERVICES INPUTS SERVICES LIBERALIZATION SERVICES SECTOR TECHNOLOGY TRANSFER TELECOM TELECOMMUNICATIONS TELEVISION TRADE IN SERVICES TRADE POLICY REFORM TRANSPORT TRANSPORT SECTOR TRANSPORT SECTORS UNIVERSAL ACCESS USER USERS USES VEHICLES WORLD INVESTMENT REPORT WORLD TRADE |
| spellingShingle |
ACCESS TO SERVICES ACCESSIBILITY ACCOUNTING AIR AIR TRANSPORT BUSINESS ACTIVITY BUSINESS ENVIRONMENT BUSINESS OPPORTUNITIES BUSINESS SERVICES CAPABILITIES COMMODITIES COMMUNICATIONS MEDIA CONFIDENCE DEVELOPING COUNTRIES DOMESTIC MARKET DOMESTIC PROVIDERS DRIVING DRIVING COSTS ECONOMIC DEVELOPMENT ELECTRICITY ENTERPRISE SURVEYS EQUIPMENT EXPORT MARKETS FINANCIAL SERVICES FOREIGN DIRECT INVESTMENT FOREIGN ENTRY FOREIGN EQUITY FOREIGN EXCHANGE FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN OWNERSHIP FOREIGN PARTICIPATION FREIGHT FREIGHT SECTOR GLOBAL MARKETPLACE GLOBAL TRADE GROSS DOMESTIC PRODUCT GROWTH RATE IMPORTANCE OF SERVICES INCREASED COMPETITION INNOVATION INSURANCE INTELLECTUAL PROPERTY INTERNATIONAL BUSINESS INTERNATIONAL TRADE LIBERALIZATION MANUFACTURING MANUFACTURING INDUSTRIES MARKET FAILURES MONOPOLIES MONOPOLY MULTINATIONALS OUTPUT PENSION PRIVATE SECTOR PRIVATE SECTOR INVESTMENT PRODUCTIVITY QUALITY OF SERVICES RADIO REAL ESTATE REGULATORY BODIES REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY REGIME REGULATORY RESTRICTIONS RESULT RESULTS ROAD SERVICE PROVIDERS SERVICE QUALITY SERVICE SECTOR SERVICE SECTORS SERVICES INPUTS SERVICES LIBERALIZATION SERVICES SECTOR TECHNOLOGY TRANSFER TELECOM TELECOMMUNICATIONS TELEVISION TRADE IN SERVICES TRADE POLICY REFORM TRANSPORT TRANSPORT SECTOR TRANSPORT SECTORS UNIVERSAL ACCESS USER USERS USES VEHICLES WORLD INVESTMENT REPORT WORLD TRADE Duggan, Victor Rahardja, Sjamsu Varela, Gonzalo Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia |
| geographic_facet |
East Asia and Pacific Indonesia |
| relation |
Economic premise;no. 106 |
| description |
Drawing on the findings of recent
research, this note examines the extent to which changes to
policy restrictions on foreign direct investment (FDI) in
the Indonesian service sector affected the performance of
downstream manufacturers during 1997-2009. The analysis
uncovers two important findings: first, that relaxing
restrictions toward FDI in service sectors was associated
with improvements in the perceived performance of those
sectors, and second, more importantly, that this relaxation
accounted for 8 percent of the total observed increase in
manufacturers' total factor productivity (TFP) during
this period. The results show that these TFP gains accrue
disproportionately to those firms that are relatively more
productive and that gains are related to the relaxation of
restrictions in the transport as well as the electricity,
gas, and water sectors. TFP gains are associated, in
particular, with the relaxation of foreign equity limits,
screening and prior approval requirements, but less so with
discriminatory regulations that prevent multinationals from
hiring key personnel from abroad. |
| format |
Publications & Research :: Brief |
| author |
Duggan, Victor Rahardja, Sjamsu Varela, Gonzalo |
| author_facet |
Duggan, Victor Rahardja, Sjamsu Varela, Gonzalo |
| author_sort |
Duggan, Victor |
| title |
Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia |
| title_short |
Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia |
| title_full |
Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia |
| title_fullStr |
Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia |
| title_full_unstemmed |
Can Open Service Sector FDI Policy Enhance Manufacturing Productivity? Evidence from Indonesia |
| title_sort |
can open service sector fdi policy enhance manufacturing productivity? evidence from indonesia |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2013/02/17291077/can-open-service-sector-fdi-policy-enhance-manufacturing-productivity-evidence-indonesia http://hdl.handle.net/10986/17014 |
| _version_ |
1764435196011085824 |