NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Foreign Ownership and Employment Growth in Indonesian Manufacturing

Robert E. Lipsey, Fredrik Sjöholm, Jing Sun

NBER Working Paper No. 15936
Issued in April 2010
NBER Program(s):   IFM   ITI   PR

Many developing countries would like to increase the share of modern or formal sectors in their employment. One way to accomplish this goal may be to encourage the entrance of foreign firms. They are typically relatively large, with high productivity and good access to foreign markets, and might therefore be better at creating jobs than domestic firms are. However, previous research on the issue has been limited by the paucity of long data sets for firm operations.

We examine employment growth in Indonesia in a large panel of plants between 1975 and 2005, and especially in plants taken over by foreign owners from domestic ones. Employment growth is relatively high in foreign-owned establishments, although foreign firms own relatively large domestic plants, which in general grow more slowly than smaller plants. For plants that change the nationality of ownership during our period, we find a strong effect of shifts from domestic to foreign ownership in raising the growth rate of employment, but no significant effects of shifts from foreign to domestic ownership.

The faster growth of employment in the foreign-owned plants in general is concentrated in the takeovers, especially in the year of acquisition. Foreign takeover of a domestically-owned plant, on average, brings a large immediate expansion of employment.

download in pdf format
   (198 K)

email paper

This paper is available as PDF (198 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15936

Users who downloaded this paper also downloaded these:
Lipsey and Sjoholm w8299 Foreign Direct Investment and Wages in Indonesian Manufacturing
Lipsey and Sjoholm w9417 Foreign Firms and Indonesian Manufacturing Wages: An Analysis With Panel Data
Alatas, Banerjee, Hanna, Olken, and Tobias w15980 Targeting the Poor: Evidence from a Field Experiment in Indonesia
Alfaro and Chen w17141 Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance
Feenstra, Lipsey, Branstetter, Foley, Harrigan, Jensen, Kletzer, Mann, Schott, and Wright w16254 Report on the State of Available Data for the Study of International Trade and Foreign Direct Investment
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us