PUBLICATIONS & REPORTS

Contents Introduction

Manufactured exports have responded positively to trade reforms in Indonesia over the period of study (1985-95). Manufactured exports, in turn, have generated additional employment both directly and indirectly through inter-industrial linkages. In this paper we estimate the employment effects of manufactured exports in two sub-periods, 1985-90 and 1990-95, using the newly available 1995 input-output (I-O) table and the I-O tables from 1990 and 1985. In the latter period, despite continued rapid growth of production and exports, employment creation is far less robust than in the period of 1985-90. Although light industrial exports continued to expand, they did not generate as much incremental employment as in the past. Moreover, the distribution of employment effects changed dramatically between the two periods. In the former period, employment creation through manufactured exports was greatest in manufacturing but was also quite significant in primary and tertiary industries. However, in the latter period, primary employment creation was marginal and the largest gains were in services rather than in manufacturing. And in some light industrial sectors, particularly wood, it appears that slackened export growth led, via backward linkages, to reduced employment in the primary wood sector in the latter period.