DP9342 Geography and the Determinants of Firm Exports in Indonesia

Author(s): Thomas Farole, Andrés Rodríguez-Pose, Vassilis Tselios, Deborah Winkler
Publication Date: February 2013
Keyword(s): Asia, Export intensity, Export propensity, Geography, Indonesia, Macro-factors, Micro-factors
JEL(s): F1, F2, R1
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9342

This paper uses data from the Indonesian manufacturing census in order to uncover the determinants of firm exports over the period 1990-2005. We examine to what extent differences in firm export propensity and intensity are a consequence of firm-level (microeconomic), of place-based (macroeconomic) first- and second-nature geography characteristics, or of a combination of the two. The results indicate that both internal and external factors matter. Second-nature, rather than first-nature, geography makes an important difference. The conditions of a firm?s province and those of neighboring provinces shape firm exports. Agglomeration effects, education and transport infrastructure endowment play a particularly relevant role in Indonesian firms? export propensity, while export spillovers increase export intensity.