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Study: Liberalizing Foreign Investment in Services Boosts Manufacturing in Indonesia

Gonzalo Varela's picture

Rice sacks on a truck in Indonesia. Source: http://www.flickr.com/photos/ricephotos/6025129068/Sometimes trade policy works through unexpected channels. In the case of Indonesia, opening the services sector to foreign investment appears to be a way to significantly boost the productivity of domestic manufacturing firms, according to recent joint research from the World Bank’s Office in Indonesia and the International Trade Department. This finding has implications for governments around the world that have restricted foreign investment in services – such as transport, electricity and communications – that are vital to other productive sectors in the economy.