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All Journal Economic and Finance in Indonesia
Siregar, Rizki Nauli
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Economics, Econometrics & Finance Education

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Firms Heterogeneity in Indonesia’s Manufacturing and Services Sectors Siregar, Rizki Nauli
Economics and Finance in Indonesia Vol. 71, No. 2
Publisher : UI Scholars Hub

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Abstract

Firm heterogeneity is the building block of modern trade theories. One of its important implications is that comparative advantage is driven by firm productivity, rather than sector differences across countries. Despite the prevalence of this framework, there has not been any systematic documentation on firm heterogeneity in Indonesia’s man ufacturing and services firms. Using the World Bank Enterprise Survey (WBES) data for Indonesia in 2015 and 2023, we confirm that there is firm heterogeneity in the form of size and productivity dispersion in both of the economy’s manufacturing and services sectors. We also find no strong association between size and average product of labor, yet we caution that the finding may be formed by the sample construction in the database. We also show the existence of globalization premia as well as the dynamics of the premia in the manufacturing and services firms.
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