Industrial Policy in Indonesia: A Global Value Chain Perspective

51 Pages Posted: 29 Oct 2014

See all articles by Julia Tijaja

Julia Tijaja

Independent; ASEAN Secretariat

Mohammad Faisal

Center of Reform on Economics - CORE Indonesia

Date Written: October 2014

Abstract

The gains of a country from participating in global value chains (GVCs) will depend on the productive activities taking place in its jurisdiction and their linkages to the domestic economy. Lead firms’ decision on where to locate and how to coordinate production activities is influenced, among others, by industrial policies. On the one side, policy space provides governments with some leverage in guiding economic activities and influencing development outcomes. On the other hand, policy risks have the potential to adversely affect the outcomes. This study focuses on industrial policies in Indonesia, using the mineral sector as a mini case study. The case study assesses the Indonesian Government’s recent effort to boost domestic value addition in the sector. This paper argues that the effectiveness of government policies in maximizing the gains from GVC participation depends not only on policy design, but also on policy consistency and coherence, effective implementation, and coordination.

Keywords: Industrial policy, Indonesia, global value chain, upgrading

JEL Classification: F63, F68, L52, L76, O25

Suggested Citation

Tijaja, Julia and Faisal, Mohammad, Industrial Policy in Indonesia: A Global Value Chain Perspective (October 2014). Asian Development Bank Economics Working Paper Series No. 411, Available at SSRN: https://ssrn.com/abstract=2515775 or http://dx.doi.org/10.2139/ssrn.2515775

ASEAN Secretariat ( email )

Jakarta
Indonesia

Mohammad Faisal

Center of Reform on Economics - CORE Indonesia ( email )

SME Tower 6th Fl.
Jl. Jend. Gatot Subroto Kav.94
Jakarta Selatan, 12780
Indonesia

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