class: left, middle, title-slide # The heterogenous impact of tariff and NTM</br>on Total Factor Productivity ### Krisna Gupta</br>AIFIS-MSU Conference on Indonesian Studies</br>krisna.or.id ### 25 June 2021 (updated: 2021-06-24) --- layout: true background-image: url(anutemplate/footer.jpg) background-size: cover <div class="my-footer"><span>       Australian National University | Heterogenous impact of trade policy | s.id/krisna-aifis                                                    25 June 2021</span></div> --- .judul[ # Hello! <iframe src="https://giphy.com/embed/Cmr1OMJ2FN0B2" width="300" height="300" frameBorder="0" class="giphy-embed" allowFullScreen></iframe><p><a href="https://giphy.com/gifs/hello-Cmr1OMJ2FN0B2">via GIPHY</a></p> ] .isi[ ## About me - [PhD student](https://crawford.anu.edu.au/people/phd/krisna-gupta) at Crawford School of Public Policy, ANU. - Lecturer at [Politeknik APP Jakarta](https://poltekapp.ac.id/), currently on leave. ## About this paper - Part of my dissertation. - click **s.id/krisna-aifis** for the slides. - [click here](https://www.researchgate.net/publication/346626166_THE_HETEROGENOUS_IMPACT_OF_TARIFF_AND_NTM_ON_TOTAL_FACTOR_PRODUCTIVITY_OF_INDONESIAN_FIRMS) for the pre-print. ] ??? --- .judul[ # Introduction ] .isi[ - Indonesian economic growth has been struggling to reach the pre-1998 level. - Development plans still trying to emphasize on manufacturing to carry Indonesian economy. - Globalization helps developing nations import capital, intermediate goods and know-how, exactly what Indonesia need. - This paper focuses more on the importance of trade policies on imported intermediate goods to Indonesian manufacturing growth. - Some findings: + restrictive import regulations hurt firms productivity. + Smaller firms affected more heavily. ] --- .judul[ # Importance of intermediate goods ] .isi[ - Intermediate inputs help firms' backward participation in Global Value Chain (World Bank 2020). - Help firms **access better inputs** (Amiti and Konings 2007; Bas and Strauss-Kahn 2014; Castellani and Fassio 2019; Ing, Yu and Zhang 2019). - Help firms **innovate** and be **more productive** (Fernandez and Farole 2018, Pane and Patunru 2019). - Improves access to more lucrative **foreign markets** (An and Maskus 2009; Cadot et al. 2013; Fugazza, Olarreaga and Ugarte 2017) - Closer ties of economic relationship also benefits non-economically. ] --- .pull-left[ # Trend is on reverse <iframe src="https://data.worldbank.org/share/widget?end=2019&indicators=TM.TAX.MRCH.SM.FN.ZS&locations=ID&start=2000" width='450' height='300' frameBorder='0' scrolling="no" ></iframe> ] .pull-right[ - The government is hostile toward imports, more so lately. + Highly concern with current account deficit and exchange rate. - Tariff increases in general (see figure), also Non-Tariff Measures (NTMs) (Munadi 2019). - Protectionism snowballs: + Steel `\(\Rightarrow\)` appliances. + Corn and soybean `\(\Rightarrow\)` chicken. - In other words, if your input is not competitive, your output also not competitive. ] --- .judul[ # Data ] .isi[ - Follows 1,512 firms from 2008-2012. - Survei Industri (SI) + Output, factors, ownership. + Highly unbalanced, many problematic zeroes. - Integrated customs data + Firms' import, HS-8 detail, source countries. + Only use matched SI-Customs firms. - Tariff collected from scrapping MoF's regulations. - NTMs from [UNCTAD TRAINS](https://trains.unctad.org/Forms/Analysis.aspx). - 7 broad categories, mainly SPS and TBT. ] --- .judul[ # Method: TFP regression ] .isi[ - Follows approach by Amiti and Konings (2007) and Pane and Patunru (2019). - Using Levinsohn and Petrin (2003) algorithm to get marginal productivity of labour (l), energy (n), intermediate input (m) and capital (k): `$$y_{it}= \beta_0 + \beta_l l_{it} + \beta_n n_{it} + \phi (m_{it},k_{it})+\mu_{it}$$` - Predict TFP of each firm i at time t: `$$TFP_{it}=y_{it}-\hat{\beta}_l l_{it}+\hat{\beta}_n n_{it}+\hat{\beta}_m m_{it}+\hat{\beta}_k k_{it}$$` ] --- .judul[ # Method: Trade policy variable ] .isi[ - Tariff is scrapped from Ministry of Trade's regulations + around 7 of them consisting almost 10,000 tariff lines + Customs data include source country to assign specific tariff + Tariff coverage ratio is calculated per firm basis - Same treatment for NTMs + NTM data is count data. So it's not percent. `$$C_{\theta i t}=\frac{\sum TP_{\theta scit}V_{\theta scit}}{\sum V_{\theta scit}}$$` ] --- .judul[ # Method: Final regression ] .isi[ - Lastly, log TFP is regressed as the function trade policies, ownership, firm fix effect and industry fix effect. `$$tfp_{it}=\gamma_0+\sum_{\theta} \gamma_{\theta}c_{\theta i t}+\sum_{\theta} \delta_{\theta}c_{\theta i t}*l_{it}+FO_{it} \\ +\alpha_i+ISIC_i+ \eta_{it}$$` - The term `\(\delta_{\theta}\)` shows the different impact of trade policies among firm with different size, measured in the number of labor. ] --- # Results .pull-left[ <table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Variables </th> <th style="text-align:left;"> TFP </th> <th style="text-align:left;"> VaL </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td> <td style="text-align:left;"> -0.371*** </td> <td style="text-align:left;"> 0.259** </td> </tr> <tr> <td style="text-align:left;"> (0.077) </td> <td style="text-align:left;"> (0.104) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff.l </td> <td style="text-align:left;"> 0.068*** </td> <td style="text-align:left;"> -0.048** </td> </tr> <tr> <td style="text-align:left;"> (0.014) </td> <td style="text-align:left;"> (0.019) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td> <td style="text-align:left;"> -0.381 </td> <td style="text-align:left;"> 0.103 </td> </tr> <tr> <td style="text-align:left;"> (0.278) </td> <td style="text-align:left;"> (0.372) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS.l </td> <td style="text-align:left;"> 0.062 </td> <td style="text-align:left;"> -0.029 </td> </tr> <tr> <td style="text-align:left;"> (0.048) </td> <td style="text-align:left;"> (0.064) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td> <td style="text-align:left;"> 0.074 </td> <td style="text-align:left;"> 0.462 </td> </tr> <tr> <td style="text-align:left;"> (0.310) </td> <td style="text-align:left;"> (0.415) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT.l </td> <td style="text-align:left;"> 0.013 </td> <td style="text-align:left;"> -0.051 </td> </tr> <tr> <td style="text-align:left;"> (0.055) </td> <td style="text-align:left;"> (0.073) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection </td> <td style="text-align:left;"> 0.16 </td> <td style="text-align:left;"> -0.637 </td> </tr> <tr> <td style="text-align:left;"> (0.488) </td> <td style="text-align:left;"> (0.652) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection.l </td> <td style="text-align:left;"> -0.043 </td> <td style="text-align:left;"> 0.1 </td> </tr> <tr> <td style="text-align:left;"> (0.087) </td> <td style="text-align:left;"> (0.117) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td> <td style="text-align:left;"> -0.896*** </td> <td style="text-align:left;"> 1.477*** </td> </tr> <tr> <td style="text-align:left;"> (0.292) </td> <td style="text-align:left;"> (0.390) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing.l </td> <td style="text-align:left;"> 0.147*** </td> <td style="text-align:left;"> -0.295*** </td> </tr> <tr> <td style="text-align:left;"> (0.052) </td> <td style="text-align:left;"> (0.070) </td> </tr> </tbody> </table> ] .pull-right[ <table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Variables </th> <th style="text-align:left;"> TFP </th> <th style="text-align:left;"> VaL </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control </td> <td style="text-align:left;"> -10,221 </td> <td style="text-align:left;"> -25,902 </td> </tr> <tr> <td style="text-align:left;"> (38,558) </td> <td style="text-align:left;"> (51,565) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control.l </td> <td style="text-align:left;"> 1,666 </td> <td style="text-align:left;"> 4,154 </td> </tr> <tr> <td style="text-align:left;"> (6,129) </td> <td style="text-align:left;"> (8,197) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition </td> <td style="text-align:left;"> -2.204* </td> <td style="text-align:left;"> -4.609*** </td> </tr> <tr> <td style="text-align:left;"> (1.198) </td> <td style="text-align:left;"> (1.602) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition.l </td> <td style="text-align:left;"> 0.413** </td> <td style="text-align:left;"> 0.834*** </td> </tr> <tr> <td style="text-align:left;"> (0.206) </td> <td style="text-align:left;"> (0.276) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related </td> <td style="text-align:left;"> -0.291 </td> <td style="text-align:left;"> 0.48 </td> </tr> <tr> <td style="text-align:left;"> (0.446) </td> <td style="text-align:left;"> (0.597) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related.l </td> <td style="text-align:left;"> 0.075 </td> <td style="text-align:left;"> -0.073 </td> </tr> <tr> <td style="text-align:left;"> (0.078) </td> <td style="text-align:left;"> (0.104) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> dummy FDI </td> <td style="text-align:left;"> 0.061 </td> <td style="text-align:left;"> -0.022 </td> </tr> <tr> <td style="text-align:left;"> 0.062 </td> <td style="text-align:left;"> (0.083) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign ownership </td> <td style="text-align:left;"> 0.024* </td> <td style="text-align:left;"> 0.025 </td> </tr> <tr> <td style="text-align:left;"> (0.014) </td> <td style="text-align:left;"> (0.019) </td> </tr> <tr> <td style="text-align:left;"> R-sq </td> <td style="text-align:left;"> 0.041 </td> <td style="text-align:left;"> 0.07 </td> </tr> </tbody> </table> ] --- .judul[ # Results ] .isi[ - A percent increase of tariff correlates with a 0.371% reduction in firms' TFP. + Positive `tariff*l` suggest a less severe impact for large firms. + These results are consistent without Fix effect. - NTMs are somewhat less important except for licensing (mostly quota restrictions) and competition (high presence of SOEs) - Value-added per Labor (`VaL`) has the opposite impact. + It may be the case that firms reduce labor even more than output, hence `\(\frac{Va \downarrow}{L \downarrow \downarrow} \Uparrow\)` + To test for this, I use percent change in labor as my dependant variable and rerun the regression. ] --- # Employment effect .pull-left[ <table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Variables </th> <th style="text-align:left;"> L1 </th> <th style="text-align:left;"> L1FE </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td> <td style="text-align:left;"> -0.260*** </td> <td style="text-align:left;"> -1.368*** </td> </tr> <tr> <td style="text-align:left;"> (0.047) </td> <td style="text-align:left;"> (0.063) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td> <td style="text-align:left;"> -0.176 </td> <td style="text-align:left;"> -1.650*** </td> </tr> <tr> <td style="text-align:left;"> (0.153) </td> <td style="text-align:left;"> (0.230) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td> <td style="text-align:left;"> 0.064 </td> <td style="text-align:left;"> 0.452* </td> </tr> <tr> <td style="text-align:left;"> (0.236) </td> <td style="text-align:left;"> (0.257) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment </td> <td style="text-align:left;"> 0.066 </td> <td style="text-align:left;"> 1.997*** </td> </tr> <tr> <td style="text-align:left;"> (0.349) </td> <td style="text-align:left;"> (0.370) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td> <td style="text-align:left;"> -0.818*** </td> <td style="text-align:left;"> -4.455*** </td> </tr> <tr> <td style="text-align:left;"> (0.190) </td> <td style="text-align:left;"> (0.237) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control </td> <td style="text-align:left;"> 14,832*** </td> <td style="text-align:left;"> 6,015 </td> </tr> <tr> <td style="text-align:left;"> (4,381) </td> <td style="text-align:left;"> -25,570 </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition </td> <td style="text-align:left;"> -0.999 </td> <td style="text-align:left;"> -2.788*** </td> </tr> <tr> <td style="text-align:left;"> (1.563) </td> <td style="text-align:left;"> (1.006) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related </td> <td style="text-align:left;"> -0.246 </td> <td style="text-align:left;"> -0.617* </td> </tr> <tr> <td style="text-align:left;"> (0.203) </td> <td style="text-align:left;"> (0.333) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign dummy </td> <td style="text-align:left;"> 0.028 </td> <td style="text-align:left;"> 0.091* </td> </tr> <tr> <td style="text-align:left;"> (0.031) </td> <td style="text-align:left;"> (0.053) </td> </tr> <tr> <td style="text-align:left;"> observations </td> <td style="text-align:left;"> 3,726 </td> <td style="text-align:left;"> 3,726 </td> </tr> </tbody> </table> ] .pull-right[ <table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Variables </th> <th style="text-align:left;"> L1 </th> <th style="text-align:left;"> L1FE </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff*l </td> <td style="text-align:left;"> 0.043*** </td> <td style="text-align:left;"> 0.251*** </td> </tr> <tr> <td style="text-align:left;"> (0.008) </td> <td style="text-align:left;"> (0.011) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS*l </td> <td style="text-align:left;"> 0.021 </td> <td style="text-align:left;"> 0.288*** </td> </tr> <tr> <td style="text-align:left;"> (0.027) </td> <td style="text-align:left;"> (0.041) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT*l </td> <td style="text-align:left;"> -0.008 </td> <td style="text-align:left;"> -0.095** </td> </tr> <tr> <td style="text-align:left;"> (0.043) </td> <td style="text-align:left;"> (0.045) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment*l </td> <td style="text-align:left;"> -0.008 </td> <td style="text-align:left;"> -0.345*** </td> </tr> <tr> <td style="text-align:left;"> (0.061) </td> <td style="text-align:left;"> (0.066) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing*l </td> <td style="text-align:left;"> 0.140*** </td> <td style="text-align:left;"> 0.809*** </td> </tr> <tr> <td style="text-align:left;"> (0.036) </td> <td style="text-align:left;"> (0.042) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control*l </td> <td style="text-align:left;"> -2,312*** </td> <td style="text-align:left;"> -802 </td> </tr> <tr> <td style="text-align:left;"> (695) </td> <td style="text-align:left;"> (4,064) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition*l </td> <td style="text-align:left;"> 0.207 </td> <td style="text-align:left;"> 0.360** </td> </tr> <tr> <td style="text-align:left;"> (0.335) </td> <td style="text-align:left;"> (0.163) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related*l </td> <td style="text-align:left;"> 0.042 </td> <td style="text-align:left;"> 0.132** </td> </tr> <tr> <td style="text-align:left;"> (0.036) </td> <td style="text-align:left;"> (0.059) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> % foreign </td> <td style="text-align:left;"> -0.009 </td> <td style="text-align:left;"> -0.007 </td> </tr> <tr> <td style="text-align:left;"> (0.007) </td> <td style="text-align:left;"> (0.011) </td> </tr> <tr> <td style="text-align:left;"> R-sq </td> <td style="text-align:left;"> - </td> <td style="text-align:left;"> 0.355 </td> </tr> </tbody> </table> ] --- .judul[ # Results ] .isi[ - Firms' employment is shrink with higher trade restrictions. - Correlations with NTMs are more significant. - Fix effect make the coefficient higher. ] --- .judul[ # Policy and Conclusions ] .isi[ - This paper provides yet more evidence that protectionism hurts manufacturing. + it leads to lower productivity and employment. - Additionally, bigger firms may have better ways to dampen the impact. - Overall, strategy to use manufacturing to improve the economy using trade policy would end up as a disaster. - Targeting CAD may not be ideal. + bad debt management can't be solved by protecting from import. ] --- .judul[ # Caveats ] .isi[ - TFP variable may reflect market power - NTMs have mixed results. - Count data isn't ideal - May have different impact for different types of NTMs - May have different impact on different goods - More in-depth studies are needed - The sample is quite restrictive. - Importers are different compared to general firms - the number of importers is very small - Data isn't perfect. - SI have many problems - Customs have not go beyond 2012 yet ] --- class: s ### References .pull-left[ - Amiti, Mary, and Jozef Konings. 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia." The American Economic Review 97 (5): 1611-1638. https://doi.org/10.1257/000282807783219733 - An, Galina, and Keith E. Maskus. 2009. "The Impacts of Alignment with Global Product Standards on Exports of Firms in Developing Countries." World Economy 32 (4): 552-574. https://doi.org/10.1111/j.1467-9701.2008.01150.x - Bas, Maria, and Vanessa Strauss-Kahn. 2014. "Does importing more inputs raise exports? Firm level evidence from France." Review of World Economics 150 (2): 35. - Cadot, Olivier, Alan Asprilla, Julien Gourdon, Christian Knebel, and Ralf Peters. 2015. Deep Regional Integration and Non-Tariff Measures: A Methodology for Data Analysis. United Nations (New York and Geneva: United Nations) - Castellani, Davide, and Claudio Fassio. 2019. "From new imported inputs to new exported products. Firm-level evidence from Sweden." Research Policy 48 (1): 322-338. https://doi.org/10.1016/j.respol.2018.08.021 - Fugazza, Marco, Marcello Olarreaga, and Christian Ugarte. 2017. "On the heterogeneous effects of non-tariff measures: Panel evidence from Peruvian firms." UNCTAD Blue Series Papers 77. https://ideas.repec.org/p/unc/blupap/77.html ] .pull-right[ - Ing, Lili Yan, Miaojie Yu, and Rui Zhang. 2019. "the evoltion of export quality: China and Indonesia." In World Trade Evolution: Growth, Productivity and Employment, edited by Lili Yan Ing and Miaojie Yu. Abingdon, New York: Routledge. - Levinsohn, James, and Amil Petrin. 2003. "Estimating Production Functions Using Inputs to Control for Unobservables." The Review of economic studies 70 (2): 317-341. https://doi.org/10.1111/1467-937x.00246 - Munadi, Ernawati. 2019. Indonesian non-tariff measures: updates and insights. Economic Research Institute for ASEAN and East Asia (Jakarta: Economic Research Institute for ASEAN and East Asia). - Pierola, Martha Denisse, Ana Margarida Fernandes, and Thomas Farole. 2018. "The role of imports for exporter performance in Peru." The World Economy 41 (2): 550-572. https://doi.org/10.1111/twec.12524 - Pane, Deasy, and Arianto Patunru. 2019. "Does export performance improve firm performance? Evidence from Indonesia." Working Papers in Trade and Development 05 - World Bank. 2020. World Development Report 2020 : Trading for Development in the Age of Global Value Chains. Washington, DC: World Bank. ] --- class: middle, center # Some summary statistics --- ### Firms' Characteristics Table 1. Firms' characteristics, 2008-2012 <table class="table table-striped" style="font-size: 9px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Characteristics </th> <th style="text-align:left;"> All_SI </th> <th style="text-align:left;"> Non_customs </th> <th style="text-align:left;"> Customs_only </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign ownership (%) </td> <td style="text-align:left;"> 8.15 </td> <td style="text-align:left;"> 5.96 </td> <td style="text-align:left;"> 34.77 </td> </tr> <tr> <td style="text-align:left;"> (26.17) </td> <td style="text-align:left;"> (22.60) </td> <td style="text-align:left;"> (45.06) </td> </tr> <tr> <td style="text-align:left;"> fraction of output exported (%) </td> <td style="text-align:left;"> 0.23 </td> <td style="text-align:left;"> 0.21 </td> <td style="text-align:left;"> 0.4 </td> </tr> <tr> <td style="text-align:left;"> fraction of output exported </td> <td style="text-align:left;"> (37.52) </td> <td style="text-align:left;"> (0.37) </td> <td style="text-align:left;"> (0.42) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> fraction of input imported (%) </td> <td style="text-align:left;"> 0.08 </td> <td style="text-align:left;"> 0.07 </td> <td style="text-align:left;"> 0.31 </td> </tr> <tr> <td style="text-align:left;"> (0.24) </td> <td style="text-align:left;"> (0.21) </td> <td style="text-align:left;"> (0.38) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> no. of labour employed </td> <td style="text-align:left;"> 191.07 </td> <td style="text-align:left;"> 162.75 </td> <td style="text-align:left;"> 535.44 </td> </tr> <tr> <td style="text-align:left;"> (711.73) </td> <td style="text-align:left;"> (602.46) </td> <td style="text-align:left;"> (1,457.65) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> capital stock (Million IDR) </td> <td style="text-align:left;"> 198 </td> <td style="text-align:left;"> 194 </td> <td style="text-align:left;"> 250 </td> </tr> <tr> <td style="text-align:left;"> (44,800.00) </td> <td style="text-align:left;"> (46,500) </td> <td style="text-align:left;"> (10,400) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> total intermediate input (Million IDR) </td> <td style="text-align:left;"> 50.8 </td> <td style="text-align:left;"> 41 </td> <td style="text-align:left;"> 170 </td> </tr> <tr> <td style="text-align:left;"> (617.00) </td> <td style="text-align:left;"> (515) </td> <td style="text-align:left;"> (1,330) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> total output (Million IDR) </td> <td style="text-align:left;"> 90.3 </td> <td style="text-align:left;"> 73.3 </td> <td style="text-align:left;"> 296 </td> </tr> <tr> <td style="text-align:left;"> (958.00) </td> <td style="text-align:left;"> (861) </td> <td style="text-align:left;"> (1,740) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> total value added (Million IDR) </td> <td style="text-align:left;"> 38.5 </td> <td style="text-align:left;"> 31.6 </td> <td style="text-align:left;"> 123 </td> </tr> <tr> <td style="text-align:left;"> (455.00) </td> <td style="text-align:left;"> (414) </td> <td style="text-align:left;"> (789) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> value added per labour (IDR) </td> <td style="text-align:left;"> 137,987.10 </td> <td style="text-align:left;"> 126,074 </td> <td style="text-align:left;"> 282,857 </td> </tr> <tr> <td style="text-align:left;"> (2,515,300.00) </td> <td style="text-align:left;"> (2,600,177) </td> <td style="text-align:left;"> (1,012,159) </td> </tr> <tr> <td style="text-align:left;"> No. of observation </td> <td style="text-align:left;"> 117,598 </td> <td style="text-align:left;"> 108,662 </td> <td style="text-align:left;"> 8,915 </td> </tr> </tbody> </table> --- # Average number of SPS is the highest Table 2. Mean (St.Dev) of each NTM for all HS-6-digits <table class="table table-striped" style="font-size: 11px; width: auto !important; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> NTM </th> <th style="text-align:left;"> Codes </th> <th style="text-align:left;"> N2008 </th> <th style="text-align:left;"> N2009 </th> <th style="text-align:left;"> N2010 </th> <th style="text-align:left;"> N2011 </th> <th style="text-align:left;"> N2012 </th> <th style="text-align:left;"> Examples </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Sanitary & Phytosanitary (SPS) </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> A </td> <td style="text-align:left;"> 1.715 </td> <td style="text-align:left;"> 2.337 </td> <td style="text-align:left;"> 2.222 </td> <td style="text-align:left;"> 2.255 </td> <td style="text-align:left;"> 2.774 </td> <td style="text-align:left;"> Authorization requirements </td> </tr> <tr> <td style="text-align:left;"> (2.644) </td> <td style="text-align:left;"> (4.018) </td> <td style="text-align:left;"> (3.950) </td> <td style="text-align:left;"> (4.054) </td> <td style="text-align:left;"> (5.128) </td> <td style="text-align:left;"> Quarantine requirements </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Technical Barrier to Trade (TBT) </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> B </td> <td style="text-align:left;"> 0.481 </td> <td style="text-align:left;"> 0.455 </td> <td style="text-align:left;"> 0.641 </td> <td style="text-align:left;"> 0.682 </td> <td style="text-align:left;"> 0.663 </td> <td style="text-align:left;"> Testing requirements </td> </tr> <tr> <td style="text-align:left;"> (0.962) </td> <td style="text-align:left;"> (0.978) </td> <td style="text-align:left;"> (1.334) </td> <td style="text-align:left;"> (1.361) </td> <td style="text-align:left;"> (1.352) </td> <td style="text-align:left;"> labeling requirements </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspections and other formalities </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> C </td> <td style="text-align:left;"> 0.562 </td> <td style="text-align:left;"> 0.466 </td> <td style="text-align:left;"> 0.443 </td> <td style="text-align:left;"> 0.462 </td> <td style="text-align:left;"> 0.776 </td> <td style="text-align:left;"> pre-shipment inspection </td> </tr> <tr> <td style="text-align:left;"> (1.202) </td> <td style="text-align:left;"> (1.081) </td> <td style="text-align:left;"> (1.059) </td> <td style="text-align:left;"> (1.046) </td> <td style="text-align:left;"> (1.075) </td> <td style="text-align:left;"> only trough specific ports </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Non-automatic licensing, quotas, QC, etc </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> E </td> <td style="text-align:left;"> 0.623 </td> <td style="text-align:left;"> 0.56 </td> <td style="text-align:left;"> 0.605 </td> <td style="text-align:left;"> 0.618 </td> <td style="text-align:left;"> 0.594 </td> <td style="text-align:left;"> licensing </td> </tr> <tr> <td style="text-align:left;"> (0.809) </td> <td style="text-align:left;"> (0.818) </td> <td style="text-align:left;"> (0.873) </td> <td style="text-align:left;"> (0.861) </td> <td style="text-align:left;"> (0.853) </td> <td style="text-align:left;"> quota </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control measures, extra taxes, charges </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> F </td> <td style="text-align:left;"> 0 </td> <td style="text-align:left;"> 0 </td> <td style="text-align:left;"> 0.015 </td> <td style="text-align:left;"> 0.014 </td> <td style="text-align:left;"> 0.016 </td> <td style="text-align:left;"> customs service fee </td> </tr> <tr> <td style="text-align:left;"> (0.000) </td> <td style="text-align:left;"> (0.000) </td> <td style="text-align:left;"> (0.168) </td> <td style="text-align:left;"> (0.165) </td> <td style="text-align:left;"> (0.168) </td> <td style="text-align:left;"> consumption tax </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Measures affecting competition </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> H </td> <td style="text-align:left;"> 0.019 </td> <td style="text-align:left;"> 0.052 </td> <td style="text-align:left;"> 0.05 </td> <td style="text-align:left;"> 0.048 </td> <td style="text-align:left;"> 0.046 </td> <td style="text-align:left;"> Only SOEs </td> </tr> <tr> <td style="text-align:left;"> (0.139) </td> <td style="text-align:left;"> (0.238) </td> <td style="text-align:left;"> (0.233) </td> <td style="text-align:left;"> (0.229) </td> <td style="text-align:left;"> (0.224) </td> <td style="text-align:left;"> - </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related measures </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> P </td> <td style="text-align:left;"> 0.901 </td> <td style="text-align:left;"> 0.704 </td> <td style="text-align:left;"> 0.708 </td> <td style="text-align:left;"> 0.683 </td> <td style="text-align:left;"> 1.172 </td> <td style="text-align:left;"> export permit </td> </tr> <tr> <td style="text-align:left;"> (1.172) </td> <td style="text-align:left;"> (1.132) </td> <td style="text-align:left;"> (1.109) </td> <td style="text-align:left;"> (1.098) </td> <td style="text-align:left;"> (1.465) </td> <td style="text-align:left;"> export quota </td> </tr> <tr> <td style="text-align:left;"> observations </td> <td style="text-align:left;"> - </td> <td style="text-align:left;"> 1,675 </td> <td style="text-align:left;"> 2,204 </td> <td style="text-align:left;"> 2,318 </td> <td style="text-align:left;"> 2,400 </td> <td style="text-align:left;"> 2,510 </td> <td style="text-align:left;"> - </td> </tr> </tbody> </table> --- # Simple average of tariffs from 2008-2012 .center[ Table 3. Tariff from MoF regulations (left) compared to WITS (right) ] .pull-left[ <table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Kind </th> <th style="text-align:left;"> T2008 </th> <th style="text-align:left;"> T2009 </th> <th style="text-align:left;"> T2010 </th> <th style="text-align:left;"> T2011 </th> <th style="text-align:left;"> T2012 </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> MFN </td> <td style="text-align:left;"> 7.049 </td> <td style="text-align:left;"> 7.612 </td> <td style="text-align:left;"> 6.928 </td> <td style="text-align:left;"> 6.975 </td> <td style="text-align:left;"> 6.96 </td> </tr> <tr> <td style="text-align:left;"> (12.213) </td> <td style="text-align:left;"> (12.536) </td> <td style="text-align:left;"> (8.037) </td> <td style="text-align:left;"> (7.231) </td> <td style="text-align:left;"> (7.145) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ASEAN </td> <td style="text-align:left;"> 2.478 </td> <td style="text-align:left;"> 2.49 </td> <td style="text-align:left;"> 0.15 </td> <td style="text-align:left;"> 0.15 </td> <td style="text-align:left;"> 0.15 </td> </tr> <tr> <td style="text-align:left;"> (11.094) </td> <td style="text-align:left;"> (11.206) </td> <td style="text-align:left;"> (4.559) </td> <td style="text-align:left;"> (4.559) </td> <td style="text-align:left;"> (4.559) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> China </td> <td style="text-align:left;"> 7.049 </td> <td style="text-align:left;"> 3.819 </td> <td style="text-align:left;"> 2.193 </td> <td style="text-align:left;"> 2.208 </td> <td style="text-align:left;"> 1.941 </td> </tr> <tr> <td style="text-align:left;"> (12.213) </td> <td style="text-align:left;"> (12.673) </td> <td style="text-align:left;"> (7.941) </td> <td style="text-align:left;"> (7.941) </td> <td style="text-align:left;"> (7.927) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> South Korea </td> <td style="text-align:left;"> 7.049 </td> <td style="text-align:left;"> 2.624 </td> <td style="text-align:left;"> 1.912 </td> <td style="text-align:left;"> 1.912 </td> <td style="text-align:left;"> 1.542 </td> </tr> <tr> <td style="text-align:left;"> (12.213) </td> <td style="text-align:left;"> (12.265) </td> <td style="text-align:left;"> (7.131) </td> <td style="text-align:left;"> (7.131) </td> <td style="text-align:left;"> (7.102) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> India </td> <td style="text-align:left;"> 7.049 </td> <td style="text-align:left;"> 7.612 </td> <td style="text-align:left;"> 6.394 </td> <td style="text-align:left;"> 5.874 </td> <td style="text-align:left;"> 5.341 </td> </tr> <tr> <td style="text-align:left;"> (12.213) </td> <td style="text-align:left;"> (12.536) </td> <td style="text-align:left;"> (7.809) </td> <td style="text-align:left;"> (7.517) </td> <td style="text-align:left;"> (7.322) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Japan </td> <td style="text-align:left;"> 6.11 </td> <td style="text-align:left;"> 4.639 </td> <td style="text-align:left;"> 3.274 </td> <td style="text-align:left;"> 2.618 </td> <td style="text-align:left;"> 2.23 </td> </tr> <tr> <td style="text-align:left;"> (11.967) </td> <td style="text-align:left;"> (12.356) </td> <td style="text-align:left;"> (7.353) </td> <td style="text-align:left;"> (7.114) </td> <td style="text-align:left;"> (6.487) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ANZ </td> <td style="text-align:left;"> 7.049 </td> <td style="text-align:left;"> 6.446 </td> <td style="text-align:left;"> 2.948 </td> <td style="text-align:left;"> 2.278 </td> <td style="text-align:left;"> 1.545 </td> </tr> <tr> <td style="text-align:left;"> (12.213) </td> <td style="text-align:left;"> (11.922) </td> <td style="text-align:left;"> (6.765) </td> <td style="text-align:left;"> (6.318) </td> <td style="text-align:left;"> (6.065) </td> </tr> </tbody> </table> ] .pull-right[ <table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Kind </th> <th style="text-align:left;"> T2008 </th> <th style="text-align:left;"> T2009 </th> <th style="text-align:left;"> T2010 </th> <th style="text-align:left;"> T2011 </th> <th style="text-align:left;"> T2012 </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> MFN </td> <td style="text-align:left;"> 7.762 </td> <td style="text-align:left;"> 7.595 </td> <td style="text-align:left;"> 7.564 </td> <td style="text-align:left;"> 7.051 </td> <td style="text-align:left;"> 7.053 </td> </tr> <tr> <td style="text-align:left;"> (12.631) </td> <td style="text-align:left;"> (12.456) </td> <td style="text-align:left;"> (12.412) </td> <td style="text-align:left;"> (7.015) </td> <td style="text-align:left;"> (7.016) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ASEAN </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="12"> - </td> <td style="text-align:left;"> 1.84 </td> <td style="text-align:left;"> 1.843 </td> <td style="text-align:left;"> 0.152 </td> <td style="text-align:left;"> 0.152 </td> </tr> <tr> <td style="text-align:left;"> (11.079) </td> <td style="text-align:left;"> (11.067) </td> <td style="text-align:left;"> (4.285) </td> <td style="text-align:left;"> (4.287) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> China </td> <td style="text-align:left;"> 3.665 </td> <td style="text-align:left;"> 2.743 </td> <td style="text-align:left;"> 1.85 </td> <td style="text-align:left;"> 1.579 </td> </tr> <tr> <td style="text-align:left;"> (12.342) </td> <td style="text-align:left;"> (12.392) </td> <td style="text-align:left;"> (6.853) </td> <td style="text-align:left;"> (6.823) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> South Korea </td> <td style="text-align:left;"> 2.564 </td> <td style="text-align:left;"> 2.56 </td> <td style="text-align:left;"> 1.698 </td> <td style="text-align:left;"> 1.326 </td> </tr> <tr> <td style="text-align:left;"> (12.087) </td> <td style="text-align:left;"> (12.084) </td> <td style="text-align:left;"> (6.395) </td> <td style="text-align:left;"> (6.349) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> India </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="6"> - </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="6"> - </td> <td style="text-align:left;"> 5.409 </td> <td style="text-align:left;"> 4.991 </td> </tr> <tr> <td style="text-align:left;"> (6.726) </td> <td style="text-align:left;"> (6.620) </td> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Japan </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="4"> - </td> <td style="text-align:left;vertical-align: middle !important;" rowspan="4"> - </td> </tr> <tr> </tr> <tr> <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ANZ </td> </tr> <tr> </tr> </tbody> </table> ] --- # Coverage ratio - Table 5 shows simple mean (a) and coverage ratios (b) - As expected, tariffs lie between MFN and FTAs - Import licenses and quotas are more important than SPS and TBT - Coverage ratios vs simple mean: - no visual difference on tariff - firms import more goods with NTMs .pull-left[ Table 5a. Simple average <table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Variable </th> <th style="text-align:right;"> Mean </th> <th style="text-align:right;"> St.Dev. </th> <th style="text-align:right;"> Min </th> <th style="text-align:right;"> Max </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;"> Tariff </td> <td style="text-align:right;"> 3.503 </td> <td style="text-align:right;"> 4.971 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 150 </td> </tr> <tr> <td style="text-align:left;"> SPS (A) </td> <td style="text-align:right;"> 0.108 </td> <td style="text-align:right;"> 0.718 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 29 </td> </tr> <tr> <td style="text-align:left;"> TBT (B) </td> <td style="text-align:right;"> 0.140 </td> <td style="text-align:right;"> 0.663 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 13 </td> </tr> <tr> <td style="text-align:left;"> Pre-shipment inspection (C) </td> <td style="text-align:right;"> 0.028 </td> <td style="text-align:right;"> 0.214 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 5 </td> </tr> <tr> <td style="text-align:left;"> Licensing, quota, etc (E) </td> <td style="text-align:right;"> 0.321 </td> <td style="text-align:right;"> 0.550 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 6 </td> </tr> <tr> <td style="text-align:left;"> Price control etc (F) </td> <td style="text-align:right;"> 0.000 </td> <td style="text-align:right;"> 0.008 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 2 </td> </tr> <tr> <td style="text-align:left;"> Competition measures (H) </td> <td style="text-align:right;"> 0.007 </td> <td style="text-align:right;"> 0.083 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 2 </td> </tr> <tr> <td style="text-align:left;"> Export-related (P) </td> <td style="text-align:right;"> 0.063 </td> <td style="text-align:right;"> 0.376 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 7 </td> </tr> </tbody> </table> ] .pull-left[ Table 5b. Coverage Ratio <table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;"> <thead> <tr> <th style="text-align:left;"> Variable </th> <th style="text-align:right;"> Mean </th> <th style="text-align:right;"> St.Dev. </th> <th style="text-align:right;"> Min </th> <th style="text-align:right;"> Max </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;"> Tariff Coverage Ratio (T) </td> <td style="text-align:right;"> 3.420 </td> <td style="text-align:right;"> 5.646 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 150 </td> </tr> <tr> <td style="text-align:left;"> Coverage ratio A </td> <td style="text-align:right;"> 0.246 </td> <td style="text-align:right;"> 0.931 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 19 </td> </tr> <tr> <td style="text-align:left;"> Coverage ratio B </td> <td style="text-align:right;"> 0.202 </td> <td style="text-align:right;"> 0.478 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 9 </td> </tr> <tr> <td style="text-align:left;"> Coverage ratio C </td> <td style="text-align:right;"> 0.059 </td> <td style="text-align:right;"> 0.237 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 4 </td> </tr> <tr> <td style="text-align:left;"> Coverage ratio E </td> <td style="text-align:right;"> 0.337 </td> <td style="text-align:right;"> 0.468 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 6 </td> </tr> <tr> <td style="text-align:left;"> Coverage ratio F </td> <td style="text-align:right;"> 0.000 </td> <td style="text-align:right;"> 0.001 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 0 </td> </tr> <tr> <td style="text-align:left;"> Coverage ratio H </td> <td style="text-align:right;"> 0.014 </td> <td style="text-align:right;"> 0.083 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 1 </td> </tr> <tr> <td style="text-align:left;"> Coverage ratio P </td> <td style="text-align:right;"> 0.110 </td> <td style="text-align:right;"> 0.353 </td> <td style="text-align:right;"> 0 </td> <td style="text-align:right;"> 7 </td> </tr> </tbody> </table> ]