Main Article Content
Abstract
Purpose ― This paper evaluates Indonesia's trade integration efforts and their impact on export competitiveness from 1989 to 2021. It examines the evolution of trade arrangements, starting with the ASEAN Preferential Trade Arrangement (APTA) and progressing to bilateral agreements.
Methods ― Based on Leamer and Stern, the Constant Market Share Analysis (CMSA) measures Indonesia’s export competitiveness over the years.
Findings ― The results indicate no significant improvement in competitiveness during the analysis period, with export growth primarily driven by the effect of world growth. Although competitiveness did not shift markedly over time, it remained positive overall, suggesting a buffer effect during economic crises.
Implications ― The paper suggests Indonesia should pursue deeper trade integration and unilateral economic reforms. Drawing on Korea’s experience, combining export promotion policies with trade agreements could enhance market access and foster internal competitiveness.
Originality ― This study provides long-term insights into Indonesia’s export competitiveness amidst global trade integration efforts and offers policy recommendations based on the success of Korea’s trade reforms.
Keywords
Article Details
Copyright (c) 2024 Nur Rakhman Setyoko, Rofikoh Rokhim, Ibrahim Kholilul Rohman, Ph.D., Muhammad Syaroni Rofii, Ph.D
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References
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- Amsden, A. H. (2007). Why Korea Switched: From Import Substitution to Export-Led Growth. Oxford: Oxford University Press.
- Aslam, M., & Yee, L. S. (2023). The Role of Japanese Foreign Direct Investment in Growth and Trade Development of ASEAN Economies. Journal of Management & Training for Industries, 10(2). http://dx.doi.org/10.12792/JMTI.10.2.37
- Aswicahyono, H., & Hill, H. (2016). Is Indonesia trapped in the middle?. In Asia and the Middle-Income Trap. Routledge. 101-125.
- Aswicahyono, H., & Rafitrandi, D. (2018). A review of Indonesia’s economic competitiveness. Centre for Strategic and International Studies.
- Balassa, B. (1976). Types of Economic Integration. In: Machlup, F. (eds) Economic Integration: Worldwide, Regional, Sectoral. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-02571-8_2
- Balassa, B. (1977). ‘Revealed’ comparative advantage revisited: An analysis of relative export shares of the industrial countries, 1953–1971. The Manchester School, 45(4), 327-344. https://doi.org/10.1111/j.1467-9957.1977.tb00701.x
- Baldwin, R. E. (2006). Failure of the World Trade Ministerial Conference at Cancun: Reason and Remedies. World Economy, 29 (6), 677 – 696. https://doi.org/10.1111/j.1467-9701.2006.00815.x
- Basri, M. C., Rahardja, S., & Fitrania, S. N. (2016). Not a trap, but slow transition? Indonesia's pursuit to high income status. Asian Economic Papers, 15(2), 1-22. https://doi.org/10.1162/ASEP_a_00422
- Blanga-Gubbay, M. B., & Rubinova, S. (2023). Is the global economy fragmenting?. WTO Staff Working Paper, Economic Research and Statistics Division, WTO. https://hdl.handle.net/10419/280428
- Boediono. (2016). Ekonomi Indonesia dalam lintasan sejarah. Mizan.
- Fagerberg, J., & Sollie, G. (1987). The method of constant market shares analysis reconsidered. Applied Economics, 19(12), 1571-1583. https://doi.org/10.1080/00036848700000084
- Fiorentino, R. V., Verdeja, L., & Toqueboeuf, C. (2007). The changing landscape of regional trade agreements: 2006 update (No. 12). WTO discussion paper. https://hdl.handle.net/10419/107047
- Galovic, T. (2021). International competitiveness of ASEAN regional integration. Ekonomski vjesnik/Econviews-Review of Contemporary Business, Entrepreneurship and Economic Issues, 34(1). https://doi.org/10.51680/ev.34.1.2
- Haggard, S., Kim, B. K., & Moon, C. I. (1991). The transition to export-led growth in South Korea: 1954–1966. The Journal of Asian Studies, 50(4), 850-873. https://doi.org/10.2307/2058544
- Hoekman, B., Mattoo, A., & English, P. (2002). Development, Trade, and the WTO: A Handbook. Italy: World Bank.
- Kim, S. Y. (2015). Deep integration and regional trade agreements. The Oxford handbook of the political economy of international trade, 360-379.
- Krugman, P. R., & Obstfeld, M., (2009). International economics: Theory and Policy. 6th Edition, Pearson Education.
- Lall, S. (2000). The Technological structure and performance of developing country manufactured exports, 1985‐98. Oxford development studies, 28(3), 337-369. https://doi.org/10.1080/713688318
- Leal-Arcas, R. (2011). Proliferation of Regional Trade Agreements: Complementing or Supplanting Multilateralism?. Chicago Journal of International Law, 11(2). https://chicagounbound.uchicago.edu/cjil/vol11/iss2/23
- Leamer, E.E. & Stern, R.M. (1970). Quantitative International Economics. Aldine Publishing Co. Chicago.
- Mattoo, A., Rocha, N., & Ruta, M. (2020). The evolution of deep trade agreements. Washington, DC: World Bank.
- Ministry of Trade Republic of Indonesia. (2022). Ministry of Trade Republic of Indonesia. Peluncuran Perundingan Perjanjian Perdagangan Bebas Indonesia dan Persatuan Ekonomi Eurasia. https://www.kemendag.go.id/berita/foto/peluncuran-perjanjian-perdagangan-bebas-indonesia-dan-persatuan-ekonomi-eurasia.
- Mistry, P. S. (1995). Open regionalism: Stepping stone or millstone toward an improved multilateral system?. Regionalism and the Global Economy: The Case of Latin America and the Caribbean, 1-15.
- Narlikar, A., & Wilkinson, R. (2004). Collapse at the WTO: A Cancun Post-Modern. Third World Quarterly, 25 (3), 447 – 460. https://doi.org/10.1080/0143659042000191375
- Pangestu, M., Rahardja, S., & Ing, L. Y. (2015). Fifty years of trade policy in Indonesia: New world trade, old treatments. Bulletin of Indonesian Economic Studies, 51(2), 239-261. https://doi.org/10.1080/00074918.2015.1061915
- Petrović, P., Antevski, M., & Vesić, D. (2008). The international competitiveness and economic integration. Facta Universitatis Series: Economics and Organization. 5(1), 1-8.
- Rahmadi, R., & Ichihashi, M. (2012). How do export structure and competitiveness evolve since trade liberalization? An overview and assessment of Indonesian manufacturing export performance. International Journal of Trade, Economics and Finance. 3(4), 272-280. https://doi.org/10.7763/IJTEF.2012.V3.213
- Rahman, N., Rahman, M. N., Manini, M. M., & Sharma, K. (2024). Determinants of global value chain participation in regional trade agreements: the case of Regional Comprehensive Economic Partnership (RCEP). Journal of Industrial and Business Economics. 51(1), 111-134. https://doi.org/10.1007/s40812-023-00281-1
- Rajagopalan, S. (2021). The 1991 Reforms and the Quest for Economic Freedom in India. Capitalism & Society. 15(1). https://ssrn.com/abstract=3985599
- Reiterer, M., & Houng, L. I. (2023). The Economic Security Tightrope: EU Economic Security Strategy, Friend-Shoring, and European Relations with Indo-Pacific States. Institute for National Security Strategy. 169.
- Richardson, J. D. (1971). Some sensitivity tests for a" constant-market-shares" analysis of export growth. The Review of Economics and Statistics, 300-304. https://doi.org/10.2307/1937978
- Samuelson, P. A., & Nordhaus, W. D., (2009). Economics. McGraw-Hill Education.
- Stojanovic, Z., Mitrovic, R. D., & Petrovic, I. P. (2013). Serbia’s food trade competitiveness and PTAs in the EU integration process. Research in Agricultural & Applied Economics. http://dx.doi.org/10.22004/ag.econ.160512
- Suryanta, B. (2021). Indonesia's integration into the regional and global economies. https://static1.squarespace.com/static/6073e7bd03c5b9274751137e/t/6440ccbd42648732a27501a5/1681968331454/Suryanta_Thesis_2021.pdf
- Tyszynski, H. (1951). World trade in manufactured commodities, 1899‐19501. The Manchester School, 19(3), 272-304. https://doi.org/10.1111/j.1467-9957.1951.tb00012.x
- Widodo, T. (2010). Market dynamics in the EU, NAFTA, North East Asia and ASEAN: the method of constant market shares (CMS) analysis. Journal of Economic Integration, 480-500. https://www.jstor.org/stable/23000869
- WTO Secretariat, (2007). Trade Policy Review: Indonesia Secretariat Report, https://docs.wto.org/dol2fe/Pages/FE_Search/MultiDDFDocuments/19103/Q:/WT/TPR/S184-00.pdf;Q:/WT/TPR/S184-01.pdf;Q:/WT/TPR/S184-02.pdf;Q:/WT/TPR/S184-03.pdf;Q:/WT/TPR/S184-04.pdf;Q:/WT/TPR/S184-05.pdf/
- WTO Secretariat, (2020). Trade Policy Review: Indonesia Secretariat Report, https://www.wto.org/english/tratop_e/tpr_e/tp501_e.htm
References
ASEAN Secretariat. (2023). RCEP, https://asean.org/our-communities/economic-community/integration-with-global-economy/the-regional-comprehensive-economic-partnership-rcep/ (downloaded 31 October 2023)
Abbas, M., Duchesne, E. (2023). Beyond the Failure of the WTO: Resilience of Trade Multilateralism. In: Guilbaud, A., Petiteville, F., Ramel, F. (eds) Crisis of Multilateralism? Challenges and Resilience. The Sciences Po Series in International Relations and Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-39671-7_10
Amsden, A. H. (2007). Why Korea Switched: From Import Substitution to Export-Led Growth. Oxford: Oxford University Press.
Aslam, M., & Yee, L. S. (2023). The Role of Japanese Foreign Direct Investment in Growth and Trade Development of ASEAN Economies. Journal of Management & Training for Industries, 10(2). http://dx.doi.org/10.12792/JMTI.10.2.37
Aswicahyono, H., & Hill, H. (2016). Is Indonesia trapped in the middle?. In Asia and the Middle-Income Trap. Routledge. 101-125.
Aswicahyono, H., & Rafitrandi, D. (2018). A review of Indonesia’s economic competitiveness. Centre for Strategic and International Studies.
Balassa, B. (1976). Types of Economic Integration. In: Machlup, F. (eds) Economic Integration: Worldwide, Regional, Sectoral. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-02571-8_2
Balassa, B. (1977). ‘Revealed’ comparative advantage revisited: An analysis of relative export shares of the industrial countries, 1953–1971. The Manchester School, 45(4), 327-344. https://doi.org/10.1111/j.1467-9957.1977.tb00701.x
Baldwin, R. E. (2006). Failure of the World Trade Ministerial Conference at Cancun: Reason and Remedies. World Economy, 29 (6), 677 – 696. https://doi.org/10.1111/j.1467-9701.2006.00815.x
Basri, M. C., Rahardja, S., & Fitrania, S. N. (2016). Not a trap, but slow transition? Indonesia's pursuit to high income status. Asian Economic Papers, 15(2), 1-22. https://doi.org/10.1162/ASEP_a_00422
Blanga-Gubbay, M. B., & Rubinova, S. (2023). Is the global economy fragmenting?. WTO Staff Working Paper, Economic Research and Statistics Division, WTO. https://hdl.handle.net/10419/280428
Boediono. (2016). Ekonomi Indonesia dalam lintasan sejarah. Mizan.
Fagerberg, J., & Sollie, G. (1987). The method of constant market shares analysis reconsidered. Applied Economics, 19(12), 1571-1583. https://doi.org/10.1080/00036848700000084
Fiorentino, R. V., Verdeja, L., & Toqueboeuf, C. (2007). The changing landscape of regional trade agreements: 2006 update (No. 12). WTO discussion paper. https://hdl.handle.net/10419/107047
Galovic, T. (2021). International competitiveness of ASEAN regional integration. Ekonomski vjesnik/Econviews-Review of Contemporary Business, Entrepreneurship and Economic Issues, 34(1). https://doi.org/10.51680/ev.34.1.2
Haggard, S., Kim, B. K., & Moon, C. I. (1991). The transition to export-led growth in South Korea: 1954–1966. The Journal of Asian Studies, 50(4), 850-873. https://doi.org/10.2307/2058544
Hoekman, B., Mattoo, A., & English, P. (2002). Development, Trade, and the WTO: A Handbook. Italy: World Bank.
Kim, S. Y. (2015). Deep integration and regional trade agreements. The Oxford handbook of the political economy of international trade, 360-379.
Krugman, P. R., & Obstfeld, M., (2009). International economics: Theory and Policy. 6th Edition, Pearson Education.
Lall, S. (2000). The Technological structure and performance of developing country manufactured exports, 1985‐98. Oxford development studies, 28(3), 337-369. https://doi.org/10.1080/713688318
Leal-Arcas, R. (2011). Proliferation of Regional Trade Agreements: Complementing or Supplanting Multilateralism?. Chicago Journal of International Law, 11(2). https://chicagounbound.uchicago.edu/cjil/vol11/iss2/23
Leamer, E.E. & Stern, R.M. (1970). Quantitative International Economics. Aldine Publishing Co. Chicago.
Mattoo, A., Rocha, N., & Ruta, M. (2020). The evolution of deep trade agreements. Washington, DC: World Bank.
Ministry of Trade Republic of Indonesia. (2022). Ministry of Trade Republic of Indonesia. Peluncuran Perundingan Perjanjian Perdagangan Bebas Indonesia dan Persatuan Ekonomi Eurasia. https://www.kemendag.go.id/berita/foto/peluncuran-perjanjian-perdagangan-bebas-indonesia-dan-persatuan-ekonomi-eurasia.
Mistry, P. S. (1995). Open regionalism: Stepping stone or millstone toward an improved multilateral system?. Regionalism and the Global Economy: The Case of Latin America and the Caribbean, 1-15.
Narlikar, A., & Wilkinson, R. (2004). Collapse at the WTO: A Cancun Post-Modern. Third World Quarterly, 25 (3), 447 – 460. https://doi.org/10.1080/0143659042000191375
Pangestu, M., Rahardja, S., & Ing, L. Y. (2015). Fifty years of trade policy in Indonesia: New world trade, old treatments. Bulletin of Indonesian Economic Studies, 51(2), 239-261. https://doi.org/10.1080/00074918.2015.1061915
Petrović, P., Antevski, M., & Vesić, D. (2008). The international competitiveness and economic integration. Facta Universitatis Series: Economics and Organization. 5(1), 1-8.
Rahmadi, R., & Ichihashi, M. (2012). How do export structure and competitiveness evolve since trade liberalization? An overview and assessment of Indonesian manufacturing export performance. International Journal of Trade, Economics and Finance. 3(4), 272-280. https://doi.org/10.7763/IJTEF.2012.V3.213
Rahman, N., Rahman, M. N., Manini, M. M., & Sharma, K. (2024). Determinants of global value chain participation in regional trade agreements: the case of Regional Comprehensive Economic Partnership (RCEP). Journal of Industrial and Business Economics. 51(1), 111-134. https://doi.org/10.1007/s40812-023-00281-1
Rajagopalan, S. (2021). The 1991 Reforms and the Quest for Economic Freedom in India. Capitalism & Society. 15(1). https://ssrn.com/abstract=3985599
Reiterer, M., & Houng, L. I. (2023). The Economic Security Tightrope: EU Economic Security Strategy, Friend-Shoring, and European Relations with Indo-Pacific States. Institute for National Security Strategy. 169.
Richardson, J. D. (1971). Some sensitivity tests for a" constant-market-shares" analysis of export growth. The Review of Economics and Statistics, 300-304. https://doi.org/10.2307/1937978
Samuelson, P. A., & Nordhaus, W. D., (2009). Economics. McGraw-Hill Education.
Stojanovic, Z., Mitrovic, R. D., & Petrovic, I. P. (2013). Serbia’s food trade competitiveness and PTAs in the EU integration process. Research in Agricultural & Applied Economics. http://dx.doi.org/10.22004/ag.econ.160512
Suryanta, B. (2021). Indonesia's integration into the regional and global economies. https://static1.squarespace.com/static/6073e7bd03c5b9274751137e/t/6440ccbd42648732a27501a5/1681968331454/Suryanta_Thesis_2021.pdf
Tyszynski, H. (1951). World trade in manufactured commodities, 1899‐19501. The Manchester School, 19(3), 272-304. https://doi.org/10.1111/j.1467-9957.1951.tb00012.x
Widodo, T. (2010). Market dynamics in the EU, NAFTA, North East Asia and ASEAN: the method of constant market shares (CMS) analysis. Journal of Economic Integration, 480-500. https://www.jstor.org/stable/23000869
WTO Secretariat, (2007). Trade Policy Review: Indonesia Secretariat Report, https://docs.wto.org/dol2fe/Pages/FE_Search/MultiDDFDocuments/19103/Q:/WT/TPR/S184-00.pdf;Q:/WT/TPR/S184-01.pdf;Q:/WT/TPR/S184-02.pdf;Q:/WT/TPR/S184-03.pdf;Q:/WT/TPR/S184-04.pdf;Q:/WT/TPR/S184-05.pdf/
WTO Secretariat, (2020). Trade Policy Review: Indonesia Secretariat Report, https://www.wto.org/english/tratop_e/tpr_e/tp501_e.htm