Technological Intensity and Export Incidence: A Study of Foreign and Local Auto-Parts, Electronics and Garment Firms in Indonesia

This paper attempts to examine differences in technological capabilities between foreign and local auto parts, electronics, and textile and garment firms in Indonesia. Foreign firms enjoyed higher export incidence than local firms in all three industries. Foreign firms enjoyed higher overall technology and HR intensity means than local firms in auto parts and electronics. Foreign firms enjoyed higher and statistically significant process technology mean than local firms in electronics. Foreign firms also enjoyed higher means than local firms in process technology and R&D intensities. The econometric results showed a strong relationship between export-incidence, and overall technological, HR and process technology intensities. Foreign ownership was not only statistically significant and its coefficient positive in the overall sample of the HR regression, but it also emerged that export-incidence was stronger among foreign firms. Export-incidence involving process technology regression was also stronger in the foreign firms’ sample.