Automation and Manufacturing Performance in a Developing Country
This paper provides novel evidence on the economic impact of industrial automation in a large developing economy. It combines labor force survey and manufacturing plant-level data from Indonesia over 2008-15, when the country experienced a rapid increase in imports of robots. The findings show a pos...
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| Format: | eBook |
| Language: | English |
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Washington, D.C
The World Bank
2021
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| Collection: | World Bank E-Library Archive - Collection details see MPG.ReNa |
| Summary: | This paper provides novel evidence on the economic impact of industrial automation in a large developing economy. It combines labor force survey and manufacturing plant-level data from Indonesia over 2008-15, when the country experienced a rapid increase in imports of robots. The findings show a positive impact of robots on various measures of plants' performance and integration into global value chains. In contrast to existing evidence on advanced and emerging economies, these plant-level impacts result in an increase in manufacturing and services employment at the local level. Such employment effects are consistent with evidence of positive employment spillovers from downstream robot-adopting plants, which help extend the benefits of automation to non-adopting plants. The spillover effects may provide a rationale to incentivize manufacturing firms to adopt industrial robots. The results also suggest that the gains from automation are not equally shared: adoption of robots is associated with a reduction in the labor share in value added and an increase in skill wage premia |
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| Physical Description: | 69 pages |