Industrial Policy, Gender, and Technological Change in Indonesia
Abstract
Neoliberal consensus would have emerging semi-industrializing countries maintain very few barriers to trade and FDI. However, persistent structural gaps in technological capacity between the global north and south lead to trade patterns that often reinforce these gaps. This often means that for emerging industrializers, export oriented foreign firms will import high tech intermediate goods to drive productivity increases and further cost reduction. This pattern often leaves the highly gendered global manufacturing employment in emerging economies vulnerable to shifts in innovation that take place elsewhere in the global value chain.Industrial policies that confront the power structure of global value chains, for example local content rules, hypothetically work to narrow structural gaps. However, if they are to be successful, they must be planned alongside gender aware employment policies and protections, as well as social infrastructure enhancements that allow for inclusive social upgrading.
This paper explores these topics through an integrated analysis of Indonesia’s industrial policy, gendered employment patterns, and technological change in manufacturing. Indonesia’s industrial policy has often included restrictions on trade or FDI meant to foster domestic capacity building, including local content rules on key strategic sectors including energy and several manufacturing sectors. However, there has been little in the way of investment in gender sensitive social structures necessary to foster equitable growth, which limits the power of the provisions to accomplish their stated goals.