Exports and Innovation in Indonesian Manufacturing

Ari Kuncoro

Economics and Finance in Indonesia, 2011, vol. 59, 71-92

Abstract: In this paper we examine the bi-directional relationship between globalization and innovation in Indonesia’s manufacturing sector. The lack of innovation data in the manufacturing survey has necessitated the use of R&D expenditure as an input in the innovation production function. The focus of this study is whether exporting firms do learn from their activities in export markets or firms have to be innovative first, that is, doing R&D before they can go into foreign markets. We find firms have to do R&D first to become competitive in foreign markets. The reverse causality of whether export activities encourage firms to innovations or R&D, though significant, is statistically much weaker. But this does not preclude the possibility that the relationship between exports and R&D activities in Indonesian manufacturing is indeed bi-directional

Keywords: Indonesian manufacturing; Research and Development (search for similar items in EconPapers)
JEL-codes: D21 O12 O31 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:201104

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