The Micro-Dynamics of Catch Up in Indonesian Paper Manufacturing: An International Comparison of Plant-Level Performance
Michiel van Dijk & Adam Szirmai
#2007-010
In this study we analyze the micro-dynamics of catch up in Indonesian
paper manufacturing using a two-country plant-level data set for the
period 1975-1997. The Indonesian paper industry is selected as a
case-study because it experienced spectacular investment and growth. It
became one of the world's largest exporters and producers of paper in
the world. We apply Data Envelopment Analysis (DEA) to compare the
technical efficiency of Indonesian paper mills with that of Finnish
mills, which are considered to be the world technological leaders in
paper making. We address three questions: What is the distribution of
Indonesian plant performance vis-à-vis the technological frontier? What
is the role of entry, exit and survival for catch up? What are the
characteristics of catching-up plants? We find that on average the
Indonesian paper industry moved closer to the technological frontier
during the 1990s. However, catch up has been a highly localized process
in which only a few large establishments have achieved near
best-practice performance, while most other plants have stayed behind
JEL: 012, 047, L6
UNU-MERIT Working Papers
ISSN 1871-9872