Productivity Gains , Intersectoral Linkages , and Trade : Indonesian Manufacturing , 1980 - 1993 ¤

The importance of R&D spillovers for productivity growth has been well-documented in the literature. While studies in the context of developed countries have extensively focused on sectoral linkages, research on North-South spillovers has been largely con...ned to the aggregate level. In this paper, we pursue the objective of ascertaining the contribution of international R&D spillovers to manufacturing performance in Indonesia, a fast growing developing country – at least until the “Asian crisis” of the late nineties at the sectoral level. A novel, longitudinal data-set has been developed, combining the OECD and Indonesian data sources. This allows us to take into consideration on the one hand, a relatively long period, characterised by intense policy regulations at the beginning, followed by the initiation of reforms towards the end of the period, and the importance of the speci...c pro...les of individual sectors in absorbing spillovers, on the other. Our results indicate a signi...cant contribution of international technology spillovers in the performance of manufacturing industry in Indonesia, with the notable importance of sectoral characteristics. Additionally, it has been observed that the imperfectly competitive sectoral structures favoured the transfer of rent spillovers. ¤We thank Bart Verspagen for his encouragement and useful suggestions, and Bart Los with whom we have had fruitful discussions and whose comments vastly enriched the measure of spillover adopted in the study. The help rendered by Eddy Szirmai, Marcel Timmer, Orietta Marsili and Alessandro Nuvolari, by way of comments and discussions is also gratefully acknowledged. Responsibility for all remaining errors rests solely with us.