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"There has been increasing role of Foreign Direct Investment (FDI) in developing countries since the 1980s. Interestingly, FDI is not only expected to bring direct effects, but also indirect effects or "spillovers" to a hosti economy. This paper aims to investigate FDI spillovers in the Indonesia's chemical industry, whether domestic firms benefit or not from foreign invesment. A stochastic production frontier approach is adopted to a firm level panel data for the periode of 1998-2000. There are three important findings. First, there is a clear hierarchy of technical efficiency of chemical firms based on their ownership status. Foreign owned firms have the highest level of technical efficiency, followed by joint ventures and domestic firms. Second, even though this paper confirms positive spillovers in the industry, the magnitude is relatively small. It shows that the Indonesian chemical industry has not yet been able to take full advantage of foreign presence. Third, a wider technology gap between domestic and foreign firms results in a higher spillovers. Findings of this paper imply that more FDI inflow into the Indonesia's chemical industry may benefit the industry. However, understanding the process of how the foreign presence affects domestic firms is important to take full advantage of the foreign presence."

"Abstract. Inefficiency is one of major causes of low performance in Indonesian rice production. This study measures the technical efficiency of rice production in five Indonesian regions and examines its determining factors. A stochastic frontier production function is used to reflect best practice production given certain levels of input use with equal amounts of technology. Unbalanced panel data on input-output rice production consisting of 358 farm operation in 2003, 2008 and 2013 are employed for estimating frontier production functions. The results indicate that variation in rice production across the five main regions is due primarily to variation in technical efficiency. Sources of variation within technical inefficiency include household characteristics, composition of labour and tractor use. Of the five regions investigated, rice production on Java is the most efficient. Technical efficiency of rice production increases over time in all five regions but remains low overall. This study concludes that there is considerable room for productivity improvements in Indonesian rice-based agribusiness through increases in technical efficiency.Abstrak. Inefisiensi merupakan salah satu penyebab utama rendahnya kinerja agribisnis bebasis padi di Indonesia. Studi ini mengukur efisiensi teknis produksi padi di lima wilayah Indonesia dan meneliti faktor-faktor yang menentukan efisiensi. Fungsi produksi frontier stokastik digunakan untuk menduga produksi terbaik pada tingkat penggunaan input dan teknologi tertentu dengan jumlah yang sama. Data panel input-output produksi padi yang terdiri dari 358 agribisnis padi pada tahun 2003, 2008 dan 2013 digunakan untuk memperkirakan fungsi produksi frontier. Hasil penelitian menunjukkan bahwa variasi produksi padi di lima wilayah utama terutama disebabkan oleh perbedaan efisiensi teknis. Sumber variasi dalam inefisiensi teknis meliputi karakteristik rumah tangga petani, komposisi tenaga kerja dan traktor digunakan. Dari lima wilayah penelitian, produksi padi di Jawa adalah yang paling efisien. Efisiensi teknis produksi padi meningkat dari waktu ke waktu di semua lima wilayah namun tetap rendah secara keseluruhan. Penelitian ini menyimpulkan bahwa ada cukup peluang untuk memperbaiki produktivitas agribisnis padi Indonesia melalui peningkatan efisiensi teknis."