Title: Small and medium enterprises and low-income workers in the global value chain: evidence from Indonesia

Authors: Miguel Angel Esquivias; Lilik Sugiharti; Rossanto Dwi Handoyo; Muryani Muryani

Addresses: Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia ' Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia ' Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia ' Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia

Abstract: This paper looks at changes experienced by small and medium enterprises (SME) as well as by workers in Indonesia as a result of fragmentation in production networks. Indonesian value-added exports expanded 285% from 1995 to 2011, changing patterns of trade as it re-directed focus towards Asia and specialised in intermediate goods. This paper assesses to which extent liberalisation supported inclusive growth for SMEs, and to lower-skilled workers. Through an inter-country input-output dataset, this study measures the participation of Indonesia in the global value chain and deconstructs gross exports into value-added indicators. By integrating two additional datasets (industrial survey and labour), this study links gains at firm size and jobs. Although nearly 83% of exports are reported through large firms, SME participates by providing services and components to exporters. Direct exports of SMEs are concentrated in a few sectors; however, the indirect content reaches more than 30% of total value exported.

Keywords: production networks; jobs in exports; Indonesia; global value chain; GVC; value-added trade.

DOI: 10.1504/IJBG.2023.133269

International Journal of Business and Globalisation, 2023 Vol.34 No.3, pp.294 - 317

Received: 24 Jun 2019
Accepted: 11 Mar 2020
Published online: 11 Sep 2023 *

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