Firm Clusters and Productivity in Indonesia

Research Note
Published on 1 March 2017


Examining how agglomeration, or clustering, among Indonesian manufacturing firms has changed over the past 30 years, we found that its most robust drivers have been natural resources and supply chain linkages, especially with respect to explaining long-term changes in spatial concentration. We also developed a new approach for estimating productivity spillovers across networks of firms, but we found that spillovers between manufacturers in Indonesia were significantly smaller than what has been observed in other countries.


Samuel Bazzi

University of California, San Diego

Amalavoyal Chari

University of Sussex

Shanthi Nataraj

RAND Corporation

Alexander Rothenberg

RAND Corporation