Employment Creation and Manufactured Exports in Indonesia, 1980–90

Abstract

One of the most significant effects of the trade and regulatory policy reforms introduced in Indonesia since the mid 1980s has been the growth of manufactured exports, particularly labour-intensive manufactures. The growth of these sectors' exports has in turn generated substantial employment benefits, both directly and through backward linkages. In this paper we estimate the employment effects of the rapid growth in manufactured exports between 1980 and 1990, and compare two subperiods, 1980–85 and 1985–90. In the latter period, employment created by exports of light industries increased dramatically in absolute terms, far exceeding employment created by primary exports.

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