Resilient structure assessment using Cobb-Douglas production function: The case of the Indonesian metal industry

Ida Bagus Made Putra Jandhana, Teuku Yuri M. Zagloel, Rahmat Nurcahyo

Research output: Contribution to journalArticlepeer-review

Abstract

The metal industry in Indonesia is facing greater risks and challenges locally and globally. Therefore, decision makers in this industry should be able not only to be competitive in the market but also to be resilient in this dynamic environment. The purpose of this study is to assess and analyze the resilience of the metal sector in Indonesia through the Cobb-Douglas Production Function (CDPF). The analysis shows how labor expenses, capital investment, and Total Factor Productivity (TFP) contribute to sector growth. Shock, represented by the drastic changes in both global and local economies reflected in exchange rate shocks in 2008 and 2013, impacts not only sector growth but also the composition of labor expenses, capital investment, and TFP in the sector. Based on time series data, this study determines that the assessment is able to detect the structure of the sector's production function, which becomes the building block of sector resilience after experiencing a shock. This study and its findings contribute to studies in resilience measurement in both the metal sector and other industries.

Original languageEnglish
Pages (from-to)1061-1071
Number of pages11
JournalInternational Journal of Technology
Volume9
Issue number5
DOIs
Publication statusPublished - 1 Jan 2018

Keywords

  • Assessment
  • Cobb-Douglas Production Function
  • Resilience
  • Sector

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