Indonesia in global manufacturing value chains: Policy ambivalence and arrested growth

Prema-chandra Athukorala and Arianto Patunru

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This paper explores Indonesia's experience in leveraging opportunities presented by global manufacturing value chains (GMVCs), with a comparative focus on Southeast Asia. It is motivated by growing concerns in recent policy discussions regarding the country’s underutilized growth potential, which could be unlocked through more effective integration into GMVCs. Indonesia initially had promising prospects for export-oriented industrialization by engaging in GMVCs. However, its industrialization trajectory over the subsequent years has not lived up to expectations. Strong evidence indicates that Indonesia’s deep-rooted policy ambivalence has hindered its full participation in global production networks. The findings highlight the need for a proactive investment promotion strategy to attract multinational enterprises (MNEs) involved in GMVCs.

JEL-codes: F14 F41 F60 L2 L63 O53 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2025-13

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