The EXTERNALITY OF MULTINATIONAL COMPANIES IN BONDED ZONE TO LOCAL COMPANY PRODUCTIVITY
Multinational Companies (MNC) in the Bonded Zone (BZ) obtain tax incentives and are required to export their product. Those differences allegedly led to the difference in externalities. This paper discussed the indirect impact of MNC on the productivity of local firms with a measure of productivity using Total Factor Productivity (TFP). Furthermore, this thesis seeks to measure the difference impact between MNC which operated on BZ and FDI which operated outside the BZ. Using the tax report data period 2011-2015, estimation result shows that the presence of MNC brings positive externalities to local firm productivity, and MNC which operated on MNC have bigger externalities than MNC which operated outside BZ.