Abstract
The purpose of this study is to analyze the reduction of import tariff impact on technological investment in Indonesian manufacturing companies. In this research, we are using samples from large medium manufacturing industry from IBS database during 2003-2014 with Tobit Regression Method as econometrical hypothesis testing. In theory, tariff liberalization can increase or decrease technological investment. Differences in the level of efficiency (gap technology) between companies causing diverge firm's response to the tariff liberalization. When the firm's technological gap in the country with small frontier then the competition level encourages technological investment. However, when the technological gap is large then theoretically there are two possibilities of firm's response. Large technological gap can lowering or increasing technological investment. Indonesia is a developing country where the average efficiency level is small. Therefore, it is expected that manufacturing technological gap in Indonesia compared to its large frontier. Based on the regression result, we have known that greater the tariff reduction lead higher technological investment. In addition, we found an evidence that firm with small technological gaps have greater technoloical investments than firms with large technological gaps. Technological investment of firms with large technological gaps are done for survive
Original language | Indonesian |
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Pages (from-to) | 42-64 |
Journal | EKUITAS : Jurnal Ekonomi dan Keuangan |
Volume | 2 |
Issue number | 1 |
DOIs | |
Publication status | Published - Mar 2018 |
Keywords
- tariff liberalization
- technological investment
- manufacture
- Indonesia