The Micro-Dynamics Of Catch-Up In Indonesian Paper Manufacturing


In this study we analyze the micro-dynamics of catch-up in Indonesian paper manufacturing, using a two-country plant-level dataset for the period 1975-97. We apply data envelopment analysis (DEA) to measure to what extent Indonesian paper mills are catching up with Finnish mills in terms of technical efficiency. Three questions are addressed: What is the distribution of Indonesian plant technical efficiency vis-a-vis the technological frontier? What is the role of entry, exit, and survival in Indonesia for catch-up in the paper industry as a whole? In what ways do catching-up plants in Indonesia differ from non-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.

Review of Income and Wealth, 57(1), pp. 61–83