Structure, Productivity Growth and Spillover Effects: An Empirical Investigation of Indonesian Manufacturing
Chapter 4 presents the examination of the FDI impact on performance of Indonesian manufacturing plants measured by their level of efficiency, during the period 1987--1992. Technical efficiency of individual firms is estimated using stochastic frontier approach to panel data. Panel data, which are time series on a set of cross-sectional data, offer several major advantages over conventional cross-sectional or time series data. The study fails to find a robust spillover effects in term of productivity level and growth. These results raise questions to justify long-term incentives for foreign investors, provided by many LDCs to win a fierce competition among themselves in attracting foreign firms to invest in their countries.
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign