ABSTRACT
This chapter looks at the structural change in Indonesian exports in manufacturing at the industry level Standard International Trade Classification (SITC), to grasp the dynamic of the development of manufacturing exports. It examines factors behind the structural change in Indonesian exports in manufacturing at the firm level through firm entry and exit, particularly factors that are internal to firms and industries such as ownership, financing, distribution network, skill intensity, and R&D, as well as those external to firms and industries such as infrastructure and government regulations. The export market is the avenue through which firms can learn to improve their products. To develop its products, a firm can learn from whatever technologies and information are available in the international market. Productivity is the key to the persistence of exporting. Productivity itself is not a stand-alone variable. It is influenced by access to imported inputs, capital goods, external finance, machinery importation, and infrastructure.
