The impacts of liberalization and trade facilitation on economic performance, poverty and income inequality: An analytical study

Sukoco Sukoco, Djoni Hartono, Arianto Patunru


This study examines the impacts of import duty and trade transaction cost reductions on economic performance, poverty, and income distribution inequality, through the top-down computable general equilibrium approach. Findings/Originality: It reveals that reducing import duty in agricultural decreases urban poverty but increases the poverty incidence at the rural and national levels. Reducing import duty in agricultural industry lowers urban and national poverty without affecting rural poverty. Meanwhile, the reductions of both import duty and transaction costs bring down the poverty incidence at all levels – urban, rural, and national. The inequality in rural and national income distribution increased due to the cuttings of import duty in agricultural and agricultural industry. However, it declined due to the reduction of transaction costs, and the combined transaction cost with import duty in agricultural or agricultural industry.


top-down, Computable General Equilibrium (CGE) Model, trade policy

Full Text:



Anas, T., & Roesad, K. (2003). Regional cooperation towards multilateral arrangements on agriculture, labor, and environment in the context of globalization: The case of Indonesia (CSIS Working Paper Series No. WPE065). Jakarta, Indonesia. Retrieved from

Davis, D., & Mishra, P. (2007). Stolper-Samuelson is dead: And other crimes of both theory and data. In A. Harrison (Ed.), Globalization and Poverty (pp. 87–107). University of Chicago Press. Retrieved from

Decaluwe, B., Lemelin, A., Maisonnave, H., & Robichaud, V. (2012). The PEP standard computation general equilibrium model: Single-country, static version. Canada: Partnership for Economic Policy (PEP). Retrieved from

Dollar, D., & Kraay, A. (2004). Trade, growth, and poverty. The Economic Journal, 114(493), F22–F49.

Erwidodo. (1999). Effects of trade liberalization on agriculture in Indonesia: Institutional and structural aspects (CGPRT Centre Working Papers No. 41).

Hamad, M. M., Mtengwa, B. A., & Babiker, S. A. (2014). The impact of trade liberalization on economic growth in Tanzania. International Journal of Academic Research in Business and Social Sciences, 4(5), 514–532.

Harrison, A. (2006). Globalization and poverty (NBER Working Paper Series No. 12347). Cambridge.

Khobai, H., & Chitauro, M. (2018). The impact of trade liberalisation on economic growth in Switzerland (MPRA Paper No. 89884). Muenchen.

Lofgren, H. (2003). Exercises in general equilibrium modeling using GAMS. Washington, D.C: International Food Policy Research.

Ravallion, M., Datt, G., & Walle, D. (1991). Quantifying absolute poverty in the developing world. Review of Income and Wealth, 37(4), 345–361.

Sakyi, D., Villaverde, J., Maza, A., & Bonuedi, I. (2017). The effects of trade and trade facilitation on economic growth in Africa. African Development Review, 29(2), 350–361.

Statistics Indonesia. (2008a). Indonesia socio-economic survey (SUSENAS) 2008. Jakarta, Indonesia. Retrieved from

Statistics Indonesia. (2008b). Indonesia special survey on household savings and investments (SKTIR) 2008. Jakarta, Indonesia. Retrieved from

Statistics Indonesia. (2008c). Statistical Year Book of Indonesia 2008: Social Accounting Matrix (SAM). Jakarta, Indonesia. Retrieved from

Statistics Indonesia. (2008d). Tabel input output Indonesia updating 2008. Jakarta, Indonesia. Retrieved from

Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Economic Journal of Emerging Markets (EJEM) is accredited by the Ministry of Research, Technology and Higher Education of the Republic of Indonesia (RISTEKDIKTI), No. 30/E/KPT/2018. It is currently indexed in:

Emerging Source Citation Index Clarivate AnalyticsREPEC (Econpapers)EBSCO, ProQuestDirectory of Open Access Journals (DOAJ)Cite Factor, BaseSinta (Science and Technology Index)IPI (Indonesian Publication Index)OCEC WorldCatHarvard LibraryThe Univesity of ManchesterUniversity of OxfordGoogle ScholarAsean Citation IndexDimensions - Digital Science, Publons


Creative Commons License
Economic Journal of Emerging Markets by is licensed under a Creative Commons Attribution 4.0 International License.