Determinants of exports performance: Evidence from Indonesian low-, medium-, and high-technology manufacturing industries

Abstract

This study explores the determinants of the export performance of Indonesia’s low-, medium-, and high-technology manufacturing industries by focusing on the role of raw-material imports and technical efficiency. Micro firm-level data from 2010–2015 were utilized for the analysis in this study. The stochastic frontier analysis was employed to measure technical inefficiency and to determine its effect on export performance. Our findings indicate that in all categories of industry technical efficiency, raw materials imports, foreign direct investment (FDI), location, firm size, labour productivity, and concentration of industries were significant determinants of export performance. While high efficiency increases exports in low- and medium-technology firms, exports decrease in firms with high efficiency accompanied by high imports, FDI, size, and labour productivity. Furthermore, in high-technology industries, efficiency reduces exports and again increases them when mediated by a concentration of industries and location. The empirical strategy also supports the positive effect of imports on export performance in both industries, which also aligns with decreased exports in firms with high imports accompanied by high FDI, efficiency, labour productivity, the concentration of industries, and size. To this end, the study has implications for low-, medium-, and high-technology manufacturing that are mainly concerned with increasing exports.