Automation and Manufacturing Performance in a Developing Country
This paper provides novel evidence on the economic impact of industrial automation in a large developing economy. It combines labor force survey and manufacturing plant-level data from Indonesia over 2008–15, when the country experienced a rapid in...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/853801620651245338/Automation-and-Manufacturing-Performance-in-a-Developing-Country http://hdl.handle.net/10986/35566 |
| Summary: | This paper provides novel evidence on
the economic impact of industrial automation in a large
developing economy. It combines labor force survey and
manufacturing plant-level data from Indonesia over 2008–15,
when the country experienced a rapid increase in imports of
robots. The findings show a positive impact of robots on
various measures of plants’ performance and integration into
global value chains. In contrast to existing evidence on
advanced and emerging economies, these plant-level impacts
result in an increase in manufacturing and services
employment at the local level. Such employment effects are
consistent with evidence of positive employment spillovers
from downstream robot-adopting plants, which help extend the
benefits of automation to non-adopting plants. The spillover
effects may provide a rationale to incentivize manufacturing
firms to adopt industrial robots. The results also suggest
that the gains from automation are not equally shared:
adoption of robots is associated with a reduction in the
labor share in value added and an increase in skill wage premia. |
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