Finance and Competitiveness in Developing Countries

By José María Fanelli; Rohinton Medhora | Go to book overview

sectors. The influx of capital inflows is also responsible for the expansion of the non-tradable sector during the 1991-5 period. As activities in non-tradables continued to expand, high growth was maintained until 1996, although the current account deficit continued to soar. This eventually triggered a reversal in expectations.


Notes
1
In terms of development strategy, the oil boom also produced a shift in the strategy of economic development. The availability of money and the expansion of domestic aggregate demand persuaded the government to pursue an import substitution policy. Many ambitious infrastructure and industrial projects were launched. The shift towards more inward-looking policies was also reflected through more protectionist industrial and trade policies.
2
See Section 2 on contribution to the trade balance and sectoral competitiveness.
3
Some (e.g. Iqbal 1995) argued that the reason behind the economic slowdown was a slowdown in pace of deregulation. For example, although the nominal tariff showed a decreasing trend in the pre-1991, it hardly changed during the 1991-4 period. The same pattern could also be observed for products subject to import licensing.
4
Although some argued that the dismal performance of several economic indicators was caused by the slowdown in the pace of economic deregulation, others suggested that this downward trend was part of a global phenomenon. This latter argument was based on the observation that other Asian tigers like Malaysia, Thailand and South Korea were also exhibiting a similar trend. Another reason behind the slowdown of manufactured exports was the nature of the products produced - basically destined for low end consumption and relying on low-cost labor. With the successive increases of national minimum wages, the competitiveness of Indonesian labor-intensive exports seemed to erode.
5
Unlike the previous investment boom in 1988-92 where textiles, garments and footwear made the bulk of total investments, the second investment boom was more diversified, ranging from electronic components, automotive parts, chemicals, to food and beverages. Also, most of the projects in the latter boom were destined for the Indonesian domestic market.
6
The reason for this is that an overvalued rupiah and high domestic interest rates made borrowing from abroad cheaper.
7
It is worthwhile to highlight the Indonesian electronics industry since it might become the great foreign exchange earner for the country in the future provided that the government alters the structure of protection. At present, the electronic industry has not moved much beyond assembly operations.
8
There are several explanations regarding Indonesia's loss of competitiveness in its main manufacturing exports. One explanation is that the competitiveness of Indonesia's labor-intensive industries had been eroded by the successive increases of minimum wages. Other factors, such as the boom in the domestic market, might have played a role as well. Finally, Indonesian producers also recently faced stiff competition from several emerging markets such as China, Vietnam and India that produce products of comparable quality at competitive prices.
9
A study by the World Bank (1996) found that productivity growth in Indonesia kept pace with the large increases in minimum wages untill 1993. Thereafter, the minimum wage became more binding.
10
Winners and losers have been defined from the point of view of international trade. Based on the previous analyses, winner industries include garments, footwear and wood products. All of these industries are characterized by a huge contribution to the balance of trade. Meanwhile, loser industries include industrial chemicals and transportation equipment.

-153-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited page

Bookmark this page
Finance and Competitiveness in Developing Countries
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this book
  • Bookmarks
  • Highlights & Notes
  • Citations
/ 366

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.