Foreign investment regulation and firm productivity: Granular evidence from Indonesia

Arbeitspapier

Countries that control foreign direct investment (FDI) often face the trade-off between following national policy interests and suffering efficiency losses arising from FDI restrictions. We demonstrate the presence of this trade-off in the case of a protectionist FDI policy in Indonesia that restricts FDI at the product level. Using a yearly census of Indonesian manufacturing firms for 2000 to 2015, we link productlevel changes in FDI regulation to changes in firm-level productivity. Controlling for an extensive set of fixed effects as well as potential political-economy drivers of regulation, we find that newly introduced limitations on FDI were successful at reducing foreign capital use within the regulated firms. Although the drop in foreign capital has been more than compensated by increases in domestic capital, regulated firms have experienced a substantial loss in productivity that was concentrated in the sectors most dependent on external finance and technological innovation.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: cege Discussion Papers ; No. 345

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Multinational Firms; International Business ; Economics of Regulation ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; International Investment; Long-term Capital Movements
• Thema: FDI regulation ; Indonesia ; productivity

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Genthner, Robert ; Kis-Katos, Krisztina
• Ereignis: Veröffentlichung
• (wer): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (wo): Göttingen
• (wann): 2019

Weitere Informationen

• Handle: http://hdl.handle.net/10419/197290
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ