| Efficient public transportation is important for growth and the dynamic economic functioning of cities. Many cities in the developing world are plagued by infrastructure shortages, insufficient public transportation services, and severe traffic congestion which impair industrial productivity and impede workers' access to jobs. To overcome transportation deficiencies, firms can relocate, tolerate reduced output or engage in coping strategies. Factory workers can act as “rational locators,” finding homes near factory sites or selecting jobs near fixed home locations, thereby minimizing dependence on expensive and unreliable public transportation.; This dissertation explores the nature of private coping strategies employed by garment manufacturing firms and factory workers to mitigate public transportation-related deficiencies in Jakarta, Indonesia. The analysis measures the impact that transportation deficiencies have on production and workers, and examines how costs associated with transportation problems are distributed between firms and labor.; Data from interview surveys of managers and workers reveal that size and location influence the strategies used by factory management to cope with transportation deficiencies. Strategies include forms of private provision, travel demand reduction, production decentralization, behavior modification and restrictions on suppliers and buyers. Housing and job mobility for workers is affected by family, socio-economic and migration status.; Unlike previous studies of firm responses to insufficient infrastructure, this analysis finds that small firms are not disadvantaged compared with larger firms in overcoming public transportation deficiencies. Small firms behave differently and engage in different coping strategies compared with their larger counterparts, but the overall share of resources devoted to mitigating transportation problems is comparable for firms of all sizes.; Firms devote an average of 6.5 percent of total capital and 2.4 percent of total production costs to strategies to overcome public transportation deficiencies. These figures are similar to a tax on competitiveness, though unlike typical income taxes, these “infrastructure taxes” are not used for productive ends, but rather represent private expenses to correct public failures. Understanding the links between infrastructure, industrial productivity and labor markets is increasingly necessary for city planners as globalization raises competition between cities throughout the world in attracting investment and carving out location-specific urban advantages. |
