This study investigates the impact of firm size and market concentration on firm productivity in Indonesian manufacturing. Firm size has been enduring interest in studies on firm productivity as the impact can be positive or negative. On the other hand, market concentration has increasingly been a key concern in evaluating firm productivity. This study used firm-level panel data of 6,783 manufacturing firms (47,481 observations) across 33 provinces of Indonesia. Two methods were applied in estimating the data; those methods were adjusted-autocorrelation OLS and random effect GLS. The results show that firm size has a significant positive effect on firm productivity, indicating that a large-scale firm experiences higher productivity than a small size firm. In addition, market concentration appears to have a negative impact on firm productivity, suggesting that a firm in a more concentrated industry tends to be less productive. The implication of this study suggests that a firm produces on a large scale and competes in a less concentrated market.
The textile industry in Indonesia is fascinating to study due to its essential role in the Indonesian economy and as a strategic sector for employment. While imported items continue to dominate raw material supply in this sector, Foreign Direct Investment (FDI) inflows will bring about externality effects on a firm’s efficiency. This current study examines the spillover effect of Foreign Direct Investment on firms’ technical efficiency in Indonesia’s convection industry (ISIC 14111). The study used Data Envelopment Analysis (DEA) models to calculate technical efficiency scores for each firm in the convection sector from 2010 to 2013. Changes in productivity levels are projected to occur due to technical efficiency changes. The findings indicate that Foreign Direct Investment can positively affect changes in technical efficiency through capital-labor ratio, foreign ownership, and imported material.
The study analyzed the effect of Financial Development on Human Development from 2009 to 2020 in ASEAN-4 countries. Financial development is projected with domestic credit for the private sector, broad money ratio, economic growth, openness, inflation, and the proportion of government expenditure to GDP, while human development is projected with HDI. The tests used a data panel, and the results showed that domestic credit for the private sector had a significant effect on the increase in HDI values.
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