PUBLICATIONS & REPORTS

Contents Introduction

This study first shows that the output of local plants fell from 68 percent of the total produced by Indonesia’s medium-large manufacturing plants in 1995 to 64 percent in 2005. Local plant shares also decreased in two-thirds of the 27 examined in this paper. Second, there was a weak tendency toward decreased producer concentration as Herfindahl indexes for both all plants and local plants fell in about half of the 27 industries decreased during the period. At the industry-level, there were relatively strong correlations between changes in local plant shares and the changes in concentration indicating that MNC entry and/or expansion may have led to increases in producer concentration in several industries after the crisis. Third, Spearman’s rank correlation coefficients for market shares among incumbents were generally high, indicating that rankings remained stable. Fourth, the industry-level correlation between TFP growth in local plants and Herfindahl indexes was very weak, indicating that producer concentration is not strongly correlated with TFP changes in local plants. Fifth, 2005 TFP levels were often weakly correlated with TFP and concentration, except the relatively strong tendency for incumbent plants changing into industries that were relatively concentrated in 1995 and for startups with large market shares in 2005 to have relatively high TFP in 2005. On the other hand, there was a very strong tendency for 1995 TFP levels to be highest in concentrated industries among large plants that closed during this period and among small plants with relatively large market shares in 1995.