Title : Spillover effects of foreign direct investment on manufacturing exports and imports in Indonesia

Authors:
1. Mohammad Zeqi Yasin
2. Miguel Angel Esquivias

Department: Economics

Journal Name: Studies in Economics and Finance

Kinds of Journal: Q2

Keywords : import propensity, import intensity, foreign direct investment, total factor productivity, absoptive capacity, self-selection, import substitution

ABSTRACT

PURPOSE - This study aims to identify extensive and intensive margins in exports and imports and examine whether incoming foreig direct investments (FDI) Benefit local firms in Indonesia through the export and import channels.
Design/Methodology/Approach-Using Heckman's Two-Step Selection Model to Consider the Potential of Bias of Self-Section in Export-Import Participation, This Study Uses The Firm-Level Data From 2008 To 2015 Collected from Industry And Proximate Both
Findings-The authors found that internal factors are critical for a firm to be an exporter, signaling self-acceptance in exports and imports. Spillover Effects from FDI (Spatial Properties) Support Export But Lower Import Propensity and Intensity.
Research Limitations/Implications - This Study Implies that Improving Human Capital (Absorptive Capacity) is Needed to Accelerate Export Intensity and Policies Supporting FDI Inflows In Complementary Sectors (Noninging Industries) Can Increase Export Export Propensity and Intensity and Intensity and Intensity and Reduce Imports.
Originity/Value - This Study Contributs to the Literature in Several Ways. First, the proposed export spillovers models that accounts for impact through a demonstration channel is applied to the import channel. Moreover, this study extends the models developed by Franco and Sasidharan (2010) and Yasin et al. (2022) by Incororating Spatial Spillover Effects at the Provincial Level. Subsequently, the Authors Test Whether a Firm's Technological Intensity Determins Export -Import Propensity and Intensity. This can indicate whether the specific sectors are more likely to participate in international activities based on their use of technology.

For details : https://www.emerald.com/insight/content/doi/10.1108/SEF-12-2022-0551/full/html