Productivity Differentials Between Local and Foreign Plants in Indonesian Manufacturing, 1995

This paper examines whether foreign-owned plants are more productive than locally owned plants and whether the differences in productivity are related to the degree of foreign ownership in Indonesian manufacturing in 1995. The results indicate that foreign-owned plants have higher productivity than locally owned plants. Moreover, after accounting for the age of the plant, the results indicate that wholly foreign-owned plants tend to have higher productivity than other foreign-owned plants and that relatively new foreign-owned plants tend to have relatively low productivity levels. The relationship between the share of foreign ownership and productivity level differs among industries, and in some industries, minority or majority foreign-owned plants have relatively high productivity.