Exports and Employment in Indonesia: The Decline in Labor-Intensive Manufacturing and the Rise of Services

Abstract

Employment generation has been a challenge in Indonesia since the Asian financial crisis, especially in labor-intensive manufacturing. This paper examines the impact of exports on jobs based on an analysis of input-output tables over the period 1995-2005. This document finds that fewer jobs were created through exports in manufacturing industries in 2005 than before the crisis. However, there was an increase in service sector jobs, partly because of indirect connections with the main export industries, which could be enhanced through greater domestic and international competition in services.