The correlation of international trade and growth in Indonesia: an evidence In Indonesia 1982-2019

Sudarmawan, Barianto Nurasri ORCID: (2023) The correlation of international trade and growth in Indonesia: an evidence In Indonesia 1982-2019. Jurnal Ekonomi dan Pembangunan, 30 (1). pp. 31-46. ISSN 2503-0272

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Exports generate foreign exchange that can be used for economic activities. On the other hand, imports also give households and companies more choices in consuming goods. In other words, international trade provides advantages for each country. There have been many studies that attempt to empirically prove the relationship between export-import and economic growth. The aim of this study is to re-examine the relationship between exports, imports, and growth in the short run and long run in Indonesia. This study employed the Granger Causality test and VECM to find long-term and short-term respectively. This research used secondary data annually from 1980 to 2019. Result of this empirical study, we find correlating variables are GDP-Exports, GDP-Imports, and Imports-Exports in the long-term. These three long-term findings match the short-term findings explained by VECM modeling. According to these findings, the policy recommendation is Indonesia needs to import carefully because importing consumption goods is a sure way to deplete its own foreign exchange reserves. Second, based on our empirical found, importing intermediate goods can increase our export, so we suggest Indonesia should run substitution import strategy immediately

Item Type: Journal Article
Keywords: international trade; export; import; granger causality; VECM
Subjects: 14 ECONOMICS > 1401 Economic Theory > 140102 Macroeconomic Theory
14 ECONOMICS > 1402 Applied Economics > 140210 International Economics and International Finance
14 ECONOMICS > 1402 Applied Economics > 140212 Macroeconomics (incl. Monetary and Fiscal Theory)
14 ECONOMICS > 1403 Econometrics > 140302 Econometric and Statistical Methods
14 ECONOMICS > 1403 Econometrics > 140303 Economic Models and Forecasting
14 ECONOMICS > 1403 Econometrics > 140305 Time-Series Analysis
Divisions: Faculty of Economics > Department of Islamic Banking
Depositing User: Barianto Nurasri Sudarmawan
Date Deposited: 24 Jan 2023 14:37


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