The heterogeneous impacts of tariffs and NTM on total factor productivity of Indonesian firms

Abstract

The Indonesian government has been working hard in engaging with the world market as average tariffs keep decreasing. However, it seems to follow the global trend, that is, relying on Non-Tariff Measures (NTM) to regulate its market instead to protect its industries. This paper inspects whether these measures actually hurt firms by limiting their access to better quality and cheaper foreign inputs. Building from Amiti and Konings (2007), I measure impact of trade policy shocks on firms’ Total Factor Productivity (TFP). I find that tariff and NTMs are hurting firms TFP significantly, and causing less employment.

Krisna Gupta

Lecturer

Research mainly on international trade and investment policy and its impact on firms. Indonesia in particular is my main geographical focus.