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The Spread of Cross-Border High-Tech Manufacturing Component Goods in International Trade Integration

The Spread of Cross-Border High-Tech Manufacturing Component Goods in International Trade Integration
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Author(s): Dyah Wulan Sari (Airlangga Universty, Indonesia), Haura Azzahra Tarbiyah Islamiya (Airlangga University, Indonesia)and Wenny Restikasari (Airlangga University, Indonesia)
Copyright: 2023
Pages: 19
Source title: Research Anthology on Macroeconomics and the Achievement of Global Stability
Source Author(s)/Editor(s): Information Resources Management Association (USA)
DOI: 10.4018/978-1-6684-7460-0.ch041

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Abstract

The objective of this study is to examine the spread of cross-border trading in determining the firm's production in high-technology manufacturing industries in Indonesia. The spread of cross-border trading in the model is measured by export intensity and alternatively is measured by vertical trade integration. The firm-level data of high-tech industries are implemented in this study. A panel data regression procedure is applied to estimate the model. The estimation results elucidate that vertical trade integration is a significant determinant on affecting firm's production while export intensity is not. This evidence proves that the pattern of cross-border international trade of high-technology industries shifted from exporting finished goods to exporting fragmented products. The export intensity variable is no longer representing the international trade when the firms break-down their production process. The usage of export intensity variable in firms undertaking the vertical trade integration would lead to a misleading conclusion.

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