The Impacts of Foreign Direct Investment and Export Expansion on the Performance of the High-Tech Manufacturing Industry

Dyah Wulan Sari (), Wenny Restikasari (), Shochrul Ajija, Haura Azzara Tarbiyah Islamia () and Darmawati Muchtar ()
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Dyah Wulan Sari: Airlangga University Jl. Airlangga No 4-6, Surabaya East Java 60286 INDONESIA.
Wenny Restikasari: Airlangga University Jl. Airlangga No 4-6, Surabaya East Java 60286 INDONESIA.
Haura Azzara Tarbiyah Islamia: Airlangga University Jl. Airlangga No 4-6, Surabaya East Java 60286 INDONESIA.
Darmawati Muchtar: Malikussaleh University Jl. Kampus Unimal, Bukit Indah, Blang Pulo Muara Dua, Aceh Utara, Aceh, 24355 INDONESIA

Jurnal Ekonomi Malaysia, 2021, vol. 55, issue 2, 91-105

Abstract: This study investigates the impact of foreign direct investment and export expansion on firm performance. Using firm-level data from the Indonesian high-tech manufacturing industry, we employ stochastic frontier analysis to determine firm efficiency. Our study provides evidence of negative backward and positive forward FDI spillovers on firms’ efficiency level. The results further show that foreign firms in the high-tech manufacturing industry are more efficient than local firms. Furthermore, a greater degree of fragmented trade integration is related to better performance among firm in the high-tech manufacturing industry. This indicates the significance of the production of component goods relative to the finished goods. In terms of the policy, the authority might need to consider whether the existence of FDI benefits local producers beyond promoting trading of component goods of the high-tech manufacturing industry.

Keywords: Foreign direct investment; Stochastic frontier analysis; export expansion; high-tech manufacturing industry (search for similar items in EconPapers)
JEL-codes: F14 F64 L63 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ukm:jlekon:v:55:y:2021:i:2:p:91-105

DOI: 10.17576/JEM-2021-5502-8

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