Small and medium enterprises and low-income workers in the global value chain: evidence from Indonesia
by Miguel Angel Esquivias; Lilik Sugiharti; Rossanto Dwi Handoyo; Muryani Muryani
International Journal of Business and Globalisation (IJBG), Vol. 34, No. 3, 2023

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.

Online publication date: Mon, 11-Sep-2023

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