Chapter 12: The Impact of Deindustrialization on Manufacturing Exports: A Case Study of Indonesia

This chapter investigates the potential impact of deindustrialization on the competitiveness of Indonesian manufacturing exports over the past decade. While Indonesia has demonstrably undergone a deindustrialization process since 2010, the nation’s manufacturing export performance has remained strong during this period. This study aims to contribute to the existing body of knowledge by providing quantitative evidence that sheds light on the relationship between deindustrialization and export competitiveness in the Indonesian context. Additionally, it seeks to address a critical research gap by examining the potential discrepancies between the findings of previous studies on deindustrialization and the empirical reality observed within Indonesia.

Deindustrialization refers to the decline in the relative importance of the manufacturing sector in an economy, often accompanied by a shift towards a more service-oriented or knowledge-based economy (Cáceres, 2017; Przywara, 2017; Rowthorn & Ramaswamy, 1997; Yanıkkaya et al., 2019). The measurement of deindustrialization can be from the perspective of value-added and employment (Boulhol & Fontagne, 2006; Przywara, 2017; Rowthorn & Ramaswamy, 1997). This process can have both positive and negative consequences, and its impact on manufacturing export competitiveness is complex and multifaceted.