Effective Protection in Indonesia in 1987¹

¹ We received valuable help in undertaking this research from Paul Wymenga, colleagues in Australia and officials in both the World Bank and the Department of Industry in Jakarta. Detailed acknowledgements of the contributions of these individuals are given in our 1987 report to the Department of Industry (Fane and Phillips 1987). The report, which is available from us on request, gives full details of the methodology and estimation methods employed.

Abstract

This paper provides estimates of the 1987 levels of nominal and effective protection for 134 tradeable industries based on the 1985 Indonesian input-output table. The average nominal rate of protection was 11.5%; the average effective rate was 18.5%. The standard deviations of nominal and effective rates across the 134 tradeable sectors were 17 and 48 percentage points, respectively. The results confirm that the net effect of policies has been to subsidise manufacturing at the expense of mining and quarrying, and to a lesser extent agriculture. The average effective rates of protection for these broad aggregates were. 44% for manufacturing, including oil refining; 80% for manufacturing, excluding oil refining; 19% for agriculture; and -1% for mining (including crude oil and gas) and quarrying. Policy in 1987 was also strongly biased in favour of import substitution at the expense of export expansion: the average effective rate of protection for all import-competing sectors was 47%, while that for all export-competing sectors was -2%.

¹ We received valuable help in undertaking this research from Paul Wymenga, colleagues in Australia and officials in both the World Bank and the Department of Industry in Jakarta. Detailed acknowledgements of the contributions of these individuals are given in our 1987 report to the Department of Industry (Fane and Phillips 1987). The report, which is available from us on request, gives full details of the methodology and estimation methods employed.

Notes

¹ We received valuable help in undertaking this research from Paul Wymenga, colleagues in Australia and officials in both the World Bank and the Department of Industry in Jakarta. Detailed acknowledgements of the contributions of these individuals are given in our 1987 report to the Department of Industry (Fane and Phillips 1987). The report, which is available from us on request, gives full details of the methodology and estimation methods employed.