ABSTRACT
This study looks at the participation of Indonesia in Global Value Chains (GVC) and the role it plays in fragmented structures. Through an international input-output database and by breaking up Gross Exports (GE) into different components of Value Added (VA), it traces the interaction of Indonesia within the global value chain to measure vertical specialization for Indonesia. The results show that Indonesia has significantly gained in integration with Asian value chains, both East Asia and ASEAN. Even though ASEAN as a single production region has gained little over time, Indonesia has gained presence within it. Indonesia lost share in VA trade with NAFTA and Europe and focused on Asia instead. The role of Indonesia across the GVC has experienced a structural change, moving from 50% exports of value added though final goods in 1997 to a supplier of intermediaries (59%) in 2012. Indonesia differs from ASEAN countries regarding foreign value added content in its exports as most of its value added is local (88%), is less globally integrated (12% of vertical trade vs. 35% in ASEAN), is more intra-Asian focused, and has less high-tech exports.
