A Comparative Analysis of Policy Response to the Asian Financial Crisis in 1997: A Case Study of the Automotive Industry in Indonesia and Thailand

Type de publication:

Conference Paper


Gerpisa colloquium, Paris (2018)


This paper studies the policy response to the Asian financial crisis in 1997 in Indonesia and Thailand. The severity of the financial crisis led to market-friendly policies in trade and investment across sectors. Although Indonesia and Thailand were the two worst-hit countries during the crisis, they are today the largest automotive producers in the region. In that light, (1) how did the implementation of liberalization policies and the shift towards export-oriented industrialization (EOI) strategy affect the development of the automotive industry in Indonesia and Thailand? And (2) how effective are they in improving industry growth and participation in global value chain (GVC) network? In so doing, this paper first explores the implications of the financial crisis on the automotive industry and further assesses industry development from pre-crisis to post-crisis periods. The paper applies the GVC participation, or the level of “up-streamness” or the “distance to final demand,” as proxy of countries integration into GVC using the OECD-WTO TiVA, 1995 to 2010. The main finding in this paper suggests that while EOI strategy led to export expansion it is not enough in improving industry competitiveness and position within the GVC network, thereby, raise doubts in improving productivity and technological spillovers. The paper concludes that policy targeting coupled with strong institutional linkages is necessary to capture the gains from country’s GVC participation.

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