Which Indonesian Firms Exports? The Importance of Foreign Networks

This article examines export propensities among Indonesian manufacturers. The pattern of trade between nations is well understood, but much less is known about firm level determinants to export: why do some Indonesian firms start to export while others continue to produce for the domestic market? One reason for different export propensities could be that the sunk costs for exports differ between firms. This article examines if foreign networks decrease export-costs and thereby have a positive impact on the export propensity in Indonesian manufacturing establishments. Three different types of foreign networks are examined: foreign ownership, import, and the regional presence of Foreign Direct Investment (FDI).