Graduate School of International Studies Ajou University
Publication Year
2014-08
Language
eng
Alternative Abstract
Industrialization is a hallmark for modern economic growth and development. That is why, Indonesia concerns to develop industrial sector. This research examines the determinants of non-oil industry industrialization in Indonesia. We use the number of employment in manufacturing as a performance indicator of industrialization. Gross domestic product, export and labor productivity in non-oil industry sector as factors determine industrialization. Quarterly log-differenced data covering 2004 – 2013 was utilized. We applied the unit root test for the stationarity of the data, and found all data non-stationary at level I (I) and stationary at first difference I (0). From the vector autoregression estimates, we found that export (EX), labor productivity (LP) and gross domestic product (GDP) are significant determinants of industrialization (EI). Granger-Causality test shows GDP Granger-causes EI. But export and labor productivity (LP) does not Granger-cause EI.
Keywords: industrialization, Indonesia, employment, GDP, export, labor productivity.