How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector

The performance of Indonesia's manufacturing sector has lagged over the past decade. This is seen in the decline in growth after the Asian financial crisis, by the sector's decline relative to other sectors within the economy, and relativ...

Full description

Bibliographic Details
Main Authors:	Varela, Gonzalo, Ghosh, Swati, Rahardha, Sjamsu
Format:	Policy Note
Language:	English en_US
Published:	World Bank, Jakarta 2017
Subjects:	ACCOUNTING ADVERSE IMPACT AGRICULTURE ALLOCATIVE EFFICIENCY BARRIERS TO ENTRY BASIC METALS BENCHMARK BILL BILLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL STOCK CAPITAL STOCKS COAL COMMODITY PRICE COMMODITY PRICE BOOM COMMODITY PRICES COMPETITIVENESS CONSUMERS CPI CURRENCY CURRENCY SWAPS CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT POSITION DEBT DEFLATORS DEPOSIT DEVELOPING COUNTRIES DOMESTIC MARKET DOMESTIC MARKETS DOWNWARD PRESSURE DRIVERS DUTCH DISEASE ECONOMETRIC ANALYSIS ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC FLUCTUATIONS ECONOMIC GROWTH ECONOMIC INCENTIVES ECONOMIC RECOVERY ECONOMIC THEORY ELASTICITY ELASTICITY OF EXPORTS EMERGING MARKETS EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTS EQUILIBRIUM EQUIPMENT EXCHANGE RATE EXCHANGE RATE MOVEMENTS EXCHANGE RATE UNCERTAINTY EXCHANGE RATE VOLATILITY EXPORT CAPACITY EXPORT GROWTH EXPORT GROWTH RATES EXPORT MARKETS EXPORT PERFORMANCE EXPORTER EXPORTERS EXPORTS EXPOSURE EXTERNAL BALANCE FEMALE LABOR FEMALE LABOR FORCE FINANCIAL CRISIS FISCAL POSITION FIXED EFFECTS FLEXIBLE LABOR MARKETS FOREIGN ASSETS FOREIGN EQUITY FOREIGN INVESTORS GDP GDP PER CAPITA GENERAL EQUILIBRIUM GLOBAL ECONOMY GLOBALIZATION GROWTH RATE GROWTH RATES HIGH INFLATION HOLDING IMPORT IMPORTS INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INFLATION INFLATION RATE INFLATION RATES INNOVATION INSURANCE INTERMEDIATE INPUTS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INTERNATIONAL SETTLEMENTS INVESTMENT CLIMATE INVESTMENT LEVELS IRREVERSIBILITY JOB CREATION LABOR COSTS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR PRODUCTIVITY LABOR REGULATIONS LABOUR LEVERAGE LIBERALIZATION LOCAL GOVERNMENTS LONG RUN EQUILIBRIUM
Online Access:	http://documents.worldbank.org/curated/en/602901468044333851/How-the-macroeconomic-environment-and-investment-climate-have-affected-the-manufacturing-sector http://hdl.handle.net/10986/26717

id	okr-10986-26717
recordtype	oai_dc
spelling	okr-10986-267172021-04-23T14:04:37Z How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector Varela, Gonzalo Ghosh, Swati Rahardha, Sjamsu ACCOUNTING ADVERSE IMPACT AGRICULTURE ALLOCATIVE EFFICIENCY BARRIERS TO ENTRY BASIC METALS BENCHMARK BILL BILLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL STOCK CAPITAL STOCKS COAL COMMODITY PRICE COMMODITY PRICE BOOM COMMODITY PRICES COMPETITIVENESS CONSUMERS CPI CURRENCY CURRENCY SWAPS CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT POSITION DEBT DEFLATORS DEPOSIT DEVELOPING COUNTRIES DOMESTIC MARKET DOMESTIC MARKETS DOWNWARD PRESSURE DRIVERS DUTCH DISEASE ECONOMETRIC ANALYSIS ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC FLUCTUATIONS ECONOMIC GROWTH ECONOMIC INCENTIVES ECONOMIC RECOVERY ECONOMIC THEORY ELASTICITY ELASTICITY OF EXPORTS EMERGING MARKETS EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTS EQUILIBRIUM EQUIPMENT EXCHANGE RATE EXCHANGE RATE MOVEMENTS EXCHANGE RATE UNCERTAINTY EXCHANGE RATE VOLATILITY EXPORT CAPACITY EXPORT GROWTH EXPORT GROWTH RATES EXPORT MARKETS EXPORT PERFORMANCE EXPORTER EXPORTERS EXPORTS EXPOSURE EXTERNAL BALANCE FEMALE LABOR FEMALE LABOR FORCE FINANCIAL CRISIS FISCAL POSITION FIXED EFFECTS FLEXIBLE LABOR MARKETS FOREIGN ASSETS FOREIGN EQUITY FOREIGN INVESTORS GDP GDP PER CAPITA GENERAL EQUILIBRIUM GLOBAL ECONOMY GLOBALIZATION GROWTH RATE GROWTH RATES HIGH INFLATION HOLDING IMPORT IMPORTS INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INFLATION INFLATION RATE INFLATION RATES INNOVATION INSURANCE INTERMEDIATE INPUTS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INTERNATIONAL SETTLEMENTS INVESTMENT CLIMATE INVESTMENT LEVELS IRREVERSIBILITY JOB CREATION LABOR COSTS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR PRODUCTIVITY LABOR REGULATIONS LABOUR LEVERAGE LIBERALIZATION LOCAL GOVERNMENTS LONG RUN EQUILIBRIUM The performance of Indonesia's manufacturing sector has lagged over the past decade. This is seen in the decline in growth after the Asian financial crisis, by the sector's decline relative to other sectors within the economy, and relative to countries in the region. This note documents the effects of the challenging macro and external environment on the profits of manufacturing firms, and on the uncertainty they face, and argues that these adverse conditions partially explain the stagnation of the sector in the past decade. The changes in incentives appear to have particularly affected labor-intensive sectors, with important consequences for job creation. Policies to promote growth in the manufacturing sector should aim at alleviating pressures on manufacturing costs by: (i) reducing rigidities in the market for labor; (ii) promoting competition in the market for services; and (iii) providing incentives for productivity enhancing technology adoption, while reducing profit uncertainty by; (iv) maintaining a low and predictable rate of inflation; and (v) keeping exchange rate volatility within reasonable limits. 2017-05-23T15:19:44Z 2017-05-23T15:19:44Z 2012-09 Policy Note http://documents.worldbank.org/curated/en/602901468044333851/How-the-macroeconomic-environment-and-investment-climate-have-affected-the-manufacturing-sector http://hdl.handle.net/10986/26717 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Jakarta Economic & Sector Work :: Policy Note Economic & Sector Work East Asia and Pacific Indonesia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING ADVERSE IMPACT AGRICULTURE ALLOCATIVE EFFICIENCY BARRIERS TO ENTRY BASIC METALS BENCHMARK BILL BILLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL STOCK CAPITAL STOCKS COAL COMMODITY PRICE COMMODITY PRICE BOOM COMMODITY PRICES COMPETITIVENESS CONSUMERS CPI CURRENCY CURRENCY SWAPS CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT POSITION DEBT DEFLATORS DEPOSIT DEVELOPING COUNTRIES DOMESTIC MARKET DOMESTIC MARKETS DOWNWARD PRESSURE DRIVERS DUTCH DISEASE ECONOMETRIC ANALYSIS ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC FLUCTUATIONS ECONOMIC GROWTH ECONOMIC INCENTIVES ECONOMIC RECOVERY ECONOMIC THEORY ELASTICITY ELASTICITY OF EXPORTS EMERGING MARKETS EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTS EQUILIBRIUM EQUIPMENT EXCHANGE RATE EXCHANGE RATE MOVEMENTS EXCHANGE RATE UNCERTAINTY EXCHANGE RATE VOLATILITY EXPORT CAPACITY EXPORT GROWTH EXPORT GROWTH RATES EXPORT MARKETS EXPORT PERFORMANCE EXPORTER EXPORTERS EXPORTS EXPOSURE EXTERNAL BALANCE FEMALE LABOR FEMALE LABOR FORCE FINANCIAL CRISIS FISCAL POSITION FIXED EFFECTS FLEXIBLE LABOR MARKETS FOREIGN ASSETS FOREIGN EQUITY FOREIGN INVESTORS GDP GDP PER CAPITA GENERAL EQUILIBRIUM GLOBAL ECONOMY GLOBALIZATION GROWTH RATE GROWTH RATES HIGH INFLATION HOLDING IMPORT IMPORTS INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INFLATION INFLATION RATE INFLATION RATES INNOVATION INSURANCE INTERMEDIATE INPUTS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INTERNATIONAL SETTLEMENTS INVESTMENT CLIMATE INVESTMENT LEVELS IRREVERSIBILITY JOB CREATION LABOR COSTS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR PRODUCTIVITY LABOR REGULATIONS LABOUR LEVERAGE LIBERALIZATION LOCAL GOVERNMENTS LONG RUN EQUILIBRIUM
spellingShingle	ACCOUNTING ADVERSE IMPACT AGRICULTURE ALLOCATIVE EFFICIENCY BARRIERS TO ENTRY BASIC METALS BENCHMARK BILL BILLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL STOCK CAPITAL STOCKS COAL COMMODITY PRICE COMMODITY PRICE BOOM COMMODITY PRICES COMPETITIVENESS CONSUMERS CPI CURRENCY CURRENCY SWAPS CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT POSITION DEBT DEFLATORS DEPOSIT DEVELOPING COUNTRIES DOMESTIC MARKET DOMESTIC MARKETS DOWNWARD PRESSURE DRIVERS DUTCH DISEASE ECONOMETRIC ANALYSIS ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC FLUCTUATIONS ECONOMIC GROWTH ECONOMIC INCENTIVES ECONOMIC RECOVERY ECONOMIC THEORY ELASTICITY ELASTICITY OF EXPORTS EMERGING MARKETS EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTS EQUILIBRIUM EQUIPMENT EXCHANGE RATE EXCHANGE RATE MOVEMENTS EXCHANGE RATE UNCERTAINTY EXCHANGE RATE VOLATILITY EXPORT CAPACITY EXPORT GROWTH EXPORT GROWTH RATES EXPORT MARKETS EXPORT PERFORMANCE EXPORTER EXPORTERS EXPORTS EXPOSURE EXTERNAL BALANCE FEMALE LABOR FEMALE LABOR FORCE FINANCIAL CRISIS FISCAL POSITION FIXED EFFECTS FLEXIBLE LABOR MARKETS FOREIGN ASSETS FOREIGN EQUITY FOREIGN INVESTORS GDP GDP PER CAPITA GENERAL EQUILIBRIUM GLOBAL ECONOMY GLOBALIZATION GROWTH RATE GROWTH RATES HIGH INFLATION HOLDING IMPORT IMPORTS INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INFLATION INFLATION RATE INFLATION RATES INNOVATION INSURANCE INTERMEDIATE INPUTS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INTERNATIONAL SETTLEMENTS INVESTMENT CLIMATE INVESTMENT LEVELS IRREVERSIBILITY JOB CREATION LABOR COSTS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR PRODUCTIVITY LABOR REGULATIONS LABOUR LEVERAGE LIBERALIZATION LOCAL GOVERNMENTS LONG RUN EQUILIBRIUM Varela, Gonzalo Ghosh, Swati Rahardha, Sjamsu How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector
geographic_facet	East Asia and Pacific Indonesia
description	The performance of Indonesia's manufacturing sector has lagged over the past decade. This is seen in the decline in growth after the Asian financial crisis, by the sector's decline relative to other sectors within the economy, and relative to countries in the region. This note documents the effects of the challenging macro and external environment on the profits of manufacturing firms, and on the uncertainty they face, and argues that these adverse conditions partially explain the stagnation of the sector in the past decade. The changes in incentives appear to have particularly affected labor-intensive sectors, with important consequences for job creation. Policies to promote growth in the manufacturing sector should aim at alleviating pressures on manufacturing costs by: (i) reducing rigidities in the market for labor; (ii) promoting competition in the market for services; and (iii) providing incentives for productivity enhancing technology adoption, while reducing profit uncertainty by; (iv) maintaining a low and predictable rate of inflation; and (v) keeping exchange rate volatility within reasonable limits.
format	Policy Note
author	Varela, Gonzalo Ghosh, Swati Rahardha, Sjamsu
author_facet	Varela, Gonzalo Ghosh, Swati Rahardha, Sjamsu
author_sort	Varela, Gonzalo
title	How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector
title_short	How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector
title_full	How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector
title_fullStr	How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector
title_full_unstemmed	How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector
title_sort	how the macroeconomic environment and investment climate have affected the manufacturing sector
publisher	World Bank, Jakarta
publishDate	2017
url	http://documents.worldbank.org/curated/en/602901468044333851/How-the-macroeconomic-environment-and-investment-climate-have-affected-the-manufacturing-sector http://hdl.handle.net/10986/26717
_version_	1764462547384139776

How the Macroeconomic Environment and Investment Climate Have Affected the Manufacturing Sector

Similar Items