Sari Wahyuni

FDI Impacts On Industrial Agglomeration: The Case Of Java, Indonesia

This paper attempts to examine which theory is best at explaining the geographic concentration in Java, an island in which most of the Indonesia’s large and medium manufacturing industries have located overwhelmingly. Our previous studies on Java have found that there was a stable – albeit increasing trend – and persistent geographic concentration in Java over the period 1976‐1995. Yet some critical questions exist: Why geographic concentration in Java persisted during this period? To what extent relevant theories and empirical literature can be used as an explicit test of competing theories on agglomeration forces? In answering those questions, we compare the three major grand theories of geographic concentration: Neo‐Classical Theory (NCT), New Trade Theory (NTT) and New Economic Geography (NEG). Using the regional specialization index as a measure of geographic concentration of manufacturing industry and pooling data over the period 1991‐002, our econometric analysis integrates the perspectives of industry, region (space) and time. We further explore the nature and dynamics of agglomeration forces underpinning the industrial agglomeration in Java by testing some key variables. Our econometric results rejected the NCT hypotheses and showed that the NTT and NEG can better explain the phenomena. It’s apparent that manufacturing firms in Java seek to locate in more populous and densely populated areas in order to enjoy both localization economies and urbanization economies, as shown by the significance of scale economies and income per capita. The former is associated with the size of a particular industry, while the latter reflects the size of a market in a particular urban area. More importantly, the results suggest that there is a synergy between thickness of market and agglomeration forces. The interplay of agglomeration economies is intensified by the imperfect competition of Java’s market structure. We find that Java’s market structure may restrict competition so that firms tend to concentrate geographically. Instead of providing some important recommendations for local and central governments and practical implications for investors and manufacturing firms, this paper gives empirical evidence with respect to path dependency hypothesis. The finding supports the NEG’s belief that history matters: older firms tend to enhance regional specialization.

Historical outlook of Indonesian competitiveness: past and current performance

Purpose – The purpose of this paper is to provide a critical review of the Indonesian economy and its industrialization effort, highlighting competitiveness issues faced by Indonesia and linking them to the current investment climate.Design/methodology/approach – Secondary data are used to assess competitiveness performance and competitiveness determinants. In competitiveness performance the paper analyzes the role of the Indonesian economy through its shares in world population, world total trade, and world total inward foreign direct investment. The paper also looks at outcome measures such as real GDP per capita in PPP terms and real GDP in PPP terms in level and growth. For competitiveness determinants, the paper analyzes competitive determinants reported by the Global Competitiveness Index.Findings – The competitive position of Indonesia is compared to other Asean countries and different government policies and strategies from the first president (Soekarno) till the current president (Susilo Bambang ...

The Influences of Perceived Managerial Discretion and Risk-Taking Behavior on Government Organizational Performance

ABSTRACT Purpose: This study investigates pertinent factors in perceived managerial discretion (PMD) in association with risk-taking behavior (RTB) and organizational performance within government organizations. Design/methodology/approach: This study used a mix of qualitative methods—using focus group discussions (FGDs) to select key variables affecting PMD and to validate the research findings—and quantitative methods—using structural equation modeling (SEM) to test eight hypotheses developed from FGDs and from a literature review. Out of 340 questionnaires sent out to potential participants, 260 were returned and deemed valid for SEM analysis, reflecting a satisfactory response rate of 76%. Findings: A total of six factors affecting PMD were identified: quasi-legal constraint (QLC), powerful outside forces (POFs), inertial forces (IFs), powerful inside forces (PIFs), power base (PB), and political acumen (PA). The SEM analysis indicated that QLC, PIF, PB, and PA enhance PMD, while IF tends to inhibit PMD. Stronger PMD was associated with weaker RTB on the part of government-official decision makers, while greater RTB was associated with more positive organizational outcomes. These findings are partially consistent with prior findings, with some notable contradictions. Research implications/limitations: The primary limitation of this study was its limited external validity, as these findings can only be extended to organizations with similar characteristics of those of the government institution used as the case study. These findings must be used with care for different types of public organizations. Practical implications: These findings support taking the following steps: (1) review and remove equivocal regulations that could restrain PMD, (2) streamline bureaucracy, (3) establish regulations that allow more space for innovation and discretion, (4) delineate the tasks and responsibilities of decision makers, and (5) discourage abrupt policy changes, promoting proper scrutiny and notice.

The study of regional competitiveness in Batam, Bintan and Karimun

National and regional competitiveness is one of the requirements to achieve a sustainable growth. This article examines the Indonesian competitiveness especially in Batam, Bintan and Karimun (BBK) islands by looking at the determining factors of competitiveness and its performances. We choose BBK because the government treats them as a special economic zone, where practices were adopted similar to those in free trade zones and export processing zones in foreign countries. On top of that, BBK also categorised as the oldest and reported as the most contributed FTZ area in Indonesia. This research applies both quantitative and qualitative approach. The result shows that BBK proximity to Singapore becomes the most influencing variable of region competitiveness. The degree of importance is followed by human resources and institutional factors.