Agglomeration Economies and Productivity Growth in Manufacturing Industry: Empirical Evidence from Indonesia

Widodo, Wahyu; Salim, Ruhul; Bloch, Harry

doi:10.1111/1475-4932.12115

Cited by 23 publications

(28 citation statements)

References 57 publications

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“…In the case of Indonesia, the present paper partly supports the findings in Sjöholm (1999)-finding strong evidence of diversity on productivity growth-and the findings in Widodo et al (2014)-identifying specialization as having positive effects on city growth and diversity having negative effects. However, our method is different from the previous literature.…”

Section: Analysis Of the Tfp Growth Modelssupporting

confidence: 89%

Local economic structure, productivity growth, and industry life cycle: evidence from Indonesia

Khoirunurrofik

2018

Asia-Pac J Reg Sci

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This paper examines the effects of dynamic agglomeration economies on the productivity growth of the industries in Indonesia's regions. The study introduces employment market potential into the city-industry growth estimation for controlling local size and preventing overestimation of the agglomeration effects. The results suggest that both specialization and diversity are important for cityindustry growth and that some externalities are stronger in different time periods. The effects of specialization and diversity on medium-term growth (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010) are stronger than on long-term growth , in addition to new positive effects of competition. A detailed analysis across industries reveals a strong relationship between local industrial structure and performance-productivity and employment growth-which is associated with industry maturity within its lifecycle stages.

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Section: Analysis Of the Tfp Growth Modelssupporting

confidence: 89%

Local economic structure, productivity growth, and industry life cycle: evidence from Indonesia

Khoirunurrofik

2018

Asia-Pac J Reg Sci

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“…Kuncoro (2009) mentioned that the impact of agglomeration in term of localization and urbanization economies enhance labor productivity in Jakarta and Surabaya metropolitan areas in three periods of 1990-1995, 1997-2000, and 2001-2003, emphasizing that localization economies are more significant than urbanization economies. Similarly, agglomeration will improve the productivity growth (Rizov et al, 2012;Widodo et al, 2015;Hu et al, 2015). Azari et al, (2016) also found that the urban labor productivity is determined by traditional inputs of agglomeration economies.…”

Section: Plsmentioning

confidence: 96%

“…The elasticity for capital per labor is relatively small (0.175). This condition is explained by the structure of the manufacturing industry in Indonesia, which is commonly dominated, by light or laborintensive industries (Hill, 1990a;Hill, 1990b;Widodo et al, 2015). The capital-intensive industries are typically related to heavy-processing industries such as chemical products or heavy-engineering industries such as machinery and transport equipment.…”

Section: Plsmentioning

confidence: 99%

“…This paper expects to contribute to the previous literature in Indonesia by introducing output and labor density into the productivity estimation at the regional level. Different from previous studies focusing on firm-level (Raharja & Kuncoro, 2012;Widodo et al, 2015) that used the Hirschman-Herfindahl index to capture localization economies by using total employment in the same industry, and diversity index to measure urbanization economies; this study addresses the role of industrial output and labor density as agglomeration effects. Besides, this provides evidence of agglomeration across seven metropolitan areas as the economic growth and activity centers of the country.…”

Section: Introductionmentioning

confidence: 99%

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Agglomeration and Urban Manufacture Labor Productivity in Indonesia

Wibowo¹,

Kudo

2019

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Agglomeration, the spatial concentration of industries in a specific location, has been argued to improve productivity since it could provide positive externalities such as knowledge spillover, input sharing, and labor pooling. This paper examines the effect of large and medium manufacturing industry (LMI) agglomeration on labor productivity. Measuring the output and labor density as agglomeration effect by using 2009-2014 panel data from 44 cities and regions across the metropolitan areas of Indonesia, this study shows that in terms of output share, agglomeration positively contributes to labor productivity. On the other hand, in terms of labor density, agglomeration results in a negative impact on productivity. These findings suggest the government should expand industrial clusters in less densely populated areas, especially outside the island of Java, by providing necessary infrastructures such as electricity, ports, and roads, so that this development creates favorable economic conditions for investment and industrial development in such areas. AbstrakAglomerasi, konsentrasi spasial industri di lokasi tertentu, dikaitkan untuk meningkatkan produktivitas karena eksternalitas positif yang ditimbulkan seperti limpahan pengetahuan (knowledge spillover), sharing input produksi, dan penggabungan tenaga kerja (labor pooling). Makalah ini mengkaji pengaruh aglomerasi industri manufaktur besar dan sedang (IBS) terhadap produktivitas tenaga kerja. Efek aglomerasi diukur menggunakan output dan kepadatan tenaga kerja. Dengan menggunakan data panel dari 44 kota dan kabupaten di seluruh wilayah metropolitan di Indonesia dari 2009-2004, penelitian ini menunjukkan bahwa aglomerasi bersifat sebagai pedang bermata dua. Dalam hal share output, aglomerasi secara positif berkontribusi terhadap produktivitas tenaga kerja. Di sisi lain, dalam hal kepadatan tenaga kerja, aglomerasi menghasilkan dampak negatif pada produktivitas. Temuan-temuan ini mengindikasikan bahwa pemerintah harus memperluas klaster industri di daerah-daerah berpenduduk rendah, terutama di luar pulau Jawa, dengan menyediakan infrastruktur dasar seperti listrik, pelabuhan, dan jalan, sehingga pembangunan ini menciptakan kondisi ekonomi yang menguntungkan untuk investasi dan pengembangan industri daerah tersebut.Kata Kunci: aglomerasi, output industry, kepadatan tenaga kerja, produktivitas tenaga kerja JEL Code: R11, R12, J24

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“…The results provide new insights into the rapid growth since 1981, particularly the north and center west of Brazil. Widodo et al (2014) examined the effect of agglomeration economies on productivity growth in Indonesian manufacturing industries. They found evidence of a positive specialization effect and a negative diversity effect for aggregate manufacturing and sub-sectors.…”

Section: Agglomeration Economies Externalities and Regional Growth: mentioning

confidence: 99%

Industrial structure and total factor productivity: the Tunisian manufacturing sector between 1998 and 2004

Thabet¹

2015

Ann Reg Sci

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Using a panel of manufacturing firms operating in 138 delegations across the Tunisian coast and observed over the 1998-2004 period, we study the impact of industrial structure on regional economic growth measured by total factor productivity. The results of an unbalanced panel data-based model indicate that the diversity of the industrial scene seems to be a local growth-promoting factor for high-tech sectors. Specialization often articulates the impact of diversity, while competition positively affects productivity. JEL Classification

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Agglomeration Economies and Productivity Growth in Manufacturing Industry: Empirical Evidence from Indonesia

Cited by 23 publications

References 57 publications

Local economic structure, productivity growth, and industry life cycle: evidence from Indonesia

Local economic structure, productivity growth, and industry life cycle: evidence from Indonesia

Agglomeration and Urban Manufacture Labor Productivity in Indonesia

Industrial structure and total factor productivity: the Tunisian manufacturing sector between 1998 and 2004

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