Dyah Wulan Sari, Ph.D. and WENNY RESTIKASARI, 041411131063 and Shochrul Rohmatul Ajija, - and HAURA AZZAHRA TARBIYAH ISLAMIYA, 041211132025 and Darmawati Muchtar, - (2021) The Impacts of Foreign Direct Investment and Export Expansion on the Performance of the High-Tech Manufacturing Industry. Jurnal Ekonomi Malaysia, 55 (2). pp. 91-105. ISSN 0126-1962, eISSN: 2716-6058

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Abstract

This study investigates the impact of foreign direct investment and export expansion on firm performance. Using firm-level data from the Indonesian high-tech manufacturing industry, we employ stochastic frontier analysis to determine firm efficiency. Our study provides evidence of negative backward and positive forward FDI spillovers on firms’ efficiency level. The results further show that foreign firms in the high-tech manufacturing industry are more efficient than local firms. Furthermore, a greater degree of fragmented trade integration is related to better performance among firm in the high-tech manufacturing industry. This indicates the significance of the production of component goods relative to the finished goods. In terms of the policy, the authority might need to consider whether the existence of FDI benefits local producers beyond promoting trading of component goods of the high-tech manufacturing industry.

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