DO REGIONAL TRADE AREAS IMPROVE EXPORT COMPETITIVENESS? - A CASE OF INDONESIA

Amalia Adininggar Widyasanti
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Amalia Adininggar Widyasanti: University of Melbourne, Australia

Bulletin of Monetary Economics and Banking, 2010, vol. 13, issue 1, 5-22

Abstract: Indonesia has involved in quite many regional trade agreements, since more than a decade ago. Theoritically, free trade agreements (FTAs) are very beneficial to the countries, as resources are more efficiently allocated due to production specialization. However, presence of asymmetric information, market inefficiency, and economic distortion in the real world have led to a deviation of FTAs benefits from its theoritical framework. This paper studies whether Indonesian export competitiveness is improving after Indonesia involves in ASEAN Free Trade Agreement (AFTA) and ASEAN-China Free Trade Agreement (ACFTA). Export competitiveness are measured by some trade indicators, such as: trade intensity index, market share, export product dynamics, and RCA, for some Indonesian main export products. The indices are compared across ASEAN countries and China to reveal: (i) which products are gaining or losing competitiveness in ASEAN and China markets; and (ii) which countries are becoming Indonesian main competitors in ASEAN and China markets. Additionally, this paper ends up with some policy recommendations that Indonesia should undertake to improve competitiveness of its products in ASEAN and China markets.

Keywords: FTA; export competitiveness; Indonesia (search for similar items in EconPapers)
JEL-codes: F16 R11 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:13:y:2010:i:1e:p:5-22

DOI: 10.21098/bemp.v13i1.383

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