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.
|Title of host publication||Research Anthology on Macroeconomics and the Achievement of Global Stability|
|Number of pages||19|
|Publication status||Published - 5 Aug 2022|