Indonesia and China: Friends or Foes? Quality Competition and Firm Productivity

Lili Yan Ing, Miaojie Yu and Rui Zhang
Additional contact information
Rui Zhang: Peking University

No DP-2016-29, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: We define and measure “firm-product-destination-year-specific export quality” and investigate how quality competition from China affects Indonesian firm productivity in the domestic and export markets. Our results suggest that an increase in Chinese exported product quality by 10 percent will increase the productivity of Indonesian firms by 0.4 - 0.5 percent in Indonesia’s domestic market, and increase Indonesian exporters’ productivity by 2 percent in the export market. Where we limit our sample to exporters only, an increase in Chinese exported product quality will increase Indonesian firm productivity in the export market, but not in the domestic market. Our findings broaden the horizon through which firms could benefit from opening up to trade.

Keywords: Quality; productivity; competition; firm-level study; China; Indonesia (search for similar items in EconPapers)
JEL-codes: F1 F12 F13 F14 (search for similar items in EconPapers)
Pages: 37 pages.
Date: 2016-12
New Economics Papers: this item is included in nep-bec, nep-eff, nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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