Promoting Export: Some Lessons from Indonesian Manufacturing
The improved terms of trade for Indonesia, as a result of the sharp exchange rate depreciation after the 1997/98 economic crisis, was expected to improve the country’s export performance. As documented by some studies, however, the evidence conflicts the prediction. Although some explanations have been offered in the literature, those which focus on firm behaviour are scarce, and almost all of these concentrate on macroeconomic factors. This study attempts to fill this gap and aims to draw some lessons from Indonesia’s experience, by examining the export-supply response of firms in Indonesian manufacturing. The study asks two questions. First, what is the picture of export-supply response of firms in Indonesian manufacturing during and after the 1997/98 economic crisis?, and second, which factors determine the firms’ export-supply response?