The heterogenous impact of tariff and NTM on total factor productivity of Indonesian firms

December 4, 2020·
Krisna Gupta
Krisna Gupta
· 1 min read
“REME during Op Herrick 15 by Defence” Images is licensed with CC BY-NC-SA 2.0. To view a copy of this license, visit https://creativecommons.org/licenses/by-nc-sa/2.0
Abstract
Indonesian government has been working hard in engaging with the world market as average tariff keeps on decreasing. However, it seems to follow the global trend, that is, relying on Non-Tariff Measures (NTM) to regulate its market instead to protect its industries. This paper inspects whether these measures are actually hurt firms by limiting their access to better quality and cheaper foreign inputs. This paper builds from Amiti and Konings (2007), inspecting the impact of trade policy shocks to firm’s Total Factor Productivity (TFP). This study finds that tariff and NTMs are hurting firms TFP significantly and causing less employment. The impact is less severe for bigger firms, confirming heterogenous effect of trade policy. The result suggests unintended consequences of protectionism in Indonesian market. Moreover, as the country is looking to boost foreign investment, more protectionism may be regulated to keep markup in the domestic market high as an incentive for foreign investors.
Type
publication Economics

Artikel ini telah diterima untuk diterbitkan di Bulletin of Indonesian Economic Studies (BIES) dan sedang mengalami proses edit. Artikel versi pre-edit dapat diakses di sini. Artikel ini telah dipresentasikan di Economics PhD Seminar di Crawford School of Public Policy. Slide presentasi dapat diakses di sini

SCImago Journal & Country Rank

Economics Firms Trade Total Factor Productivity
Krisna Gupta
Authors
Krisna Gupta
Lecturer

My name is Krisna, some call me Imed. I am an advisor at the Indonesian National Economic Council. My research is about trade and investment policy and how it affects Indonesian firms. I use some structured equation such as GTAP model, but also do some empirics like gravity models.

I lecture at Universitas Indonesia. Additionally, I assume a senior fellow position at Center for Indonesian Policy Studies.

I contributed to several projects with Bank Indonesia, Bappenas, ADB, Prospera, and ERIA, among others. Occasional oped writer, typically at Kompas, Jakarta Post and East Asia Forum. Please see CV or contact me for more information.