Document Type
Article
Abstract
We examine whether Foreign Direct Investment (FDI) influences wage spillover in the manufacturing sector in Indonesia from the perspective of three recipients (dimensions): industry, province, and technology intensity. Annual data of Indonesian manufacturing firms from 2011 to 2015 is employed. Using the Fixed Effect Model, we found the spatial (province) dimension to matter the most as it consistently indicates that inward FDI depresses wages in the recipient province. When we split the observation based on firm size, FDI inflows within the technology intensive subsectors were found to discourage wages. Only FDI inflows within the host industries support higher salaries for smaller domestic firms and gains in labour productivity. The coordination between central and local governments remains essential to ensure that local companies are sufficiently competitive with foreign companies.
Recommended Citation
Yasin, Mohammad Zeqi; Esquivias, Miguel Angel; and Arifin, Nur
(2022)
"FOREIGN DIRECT INVESTMENT AND WAGE SPILLOVERS IN THE INDONESIAN MANUFACTURING INDUSTRY,"
Bulletin of Monetary Economics and Banking: Vol. 25:
No.
0, Article 9.
DOI: https://doi.org/10.21098/bemp.v25i0.1821
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol25/iss0/9
First Page
125
Last Page
160
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
Indonesia
Affiliation
Universitas Airlangga