Scale Externalities in Indonesia

Arie Kuncoro
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Arie Kuncoro: Faculty of Economics University of Indonesia. The views expressed in this paper do not reflect the institution of which the author associated with

Economics and Finance in Indonesia, 2006, vol. 54, 274-314

Abstract: In this paper we examine the nature and magnitude of local scale externalities for major manufacturing industries in Indonesia in the period 1990-2003. If externalities are in the form of localization, smaller city are more likely to specialize in just one industry or a closely connected industries. On the other hand if the externalities happen to be urbanization in nature, to prosper an industry needs to find a location a diverse and large urban environment. The evidences suggest that localization forces are more dominant than urbanization. The forces of decentralization would push toward de-concentration, while local agglomeration and specialization would move industries to re-concentrate in smaller, medium size metro areas

Keywords: Firm Behavior; Capital and Total Productivity; Production and Firm Location (search for similar items in EconPapers)
JEL-codes: D21 D24 R30 (search for similar items in EconPapers)
Date: 2006
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