PENGARUH LIBERALISASI PERDAGANGAN TERHADAP TOTAL FACTOR PRODUCTIVITY (TFP): STUDI KASUS INDUSTRI TEKSTIL DAN PRODUK TEKSTIL (TPT) DI INDONESIA TAHUN 1999 – 2009

Abstract

This research aims to estimate the effect of trade liberalization on total factor productivity (TFP) in Indonesian textiles and garment industry 1999 – 2009. Trade liberalization is measured by tariffs of the final goods and the quota policy. Lower tariffs on final goods is expected to increase TFP by inducing level of competition, whereas the elimination of the quota in 2005 will raise the average of TFP through economies of scale mechanism. This research uses the medium and large manufacturing data based on 5-digit level of international standard industrial classification (ISIC).To calculate the TFP, this research adopts the method proposed by Levinsohn-Petrin, while the effect of trade liberalization on TFP is estimated using least square dummy variable (LSDV) method. The results show that the reduction of tariff on final goods has negative effect on TFP in TPT industry. The estimation results also indicate the differences of the TFP before and after the quota-elimination policy implemented in 2005. It is proved by the significant of the dummy-quota variable. In addition, foreign ownership in TPT industry shows a positive effect on TFP.