Technological effort, technological capabilities and economic performance : a case study of the paper manufacturing sector in West Java, Indonesia

Although there is a substantial body of literature on the importance of technological capabilities for economic development, the exact relationships between technological efforts, technological capabilities and economic performance at micro-level still remain unclear. How do technological efforts affect technological capabilities? To what extent and how do improvements in technological capabilities result in better economic performance of firms? This paper aims to develop adequate quantitative measures of machine-level technological effort, technological capabilities and economic performance for the paper industry in West Java, Indonesia. It explores the empirical relationships between these micro-level variables, focusing both on the relationships between efforts and capabilities and between capabilities and economic performance, with a view to deepening our general understanding of the role of capabilities in successful and less successful processes of industrialisation. Keywords: Technological effort; Technological capability; Economic performance; Paper sector; Indonesia