Trade Impediments in Indonesia

Barli Suryanta () and Arianto Arif Patunru ()
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Barli Suryanta: School of Business and Management Bandung Institute of Technology (ITB) Indonesia, Postal: Business Risk and Finance Department, School of Business and Management, Bandung Institute, of Technology (ITB), SBM ITB Main Campus, Bandung 40132, Indonesia
Arianto Arif Patunru: Arndt-Corden Department of Economics, Australian National University, Australia, Postal: Arndt-Corden Department of Economics Crawford School of Public Policy College of Asia & the Pacific, Canberra ACT 2601 Australia

Journal of Economic Integration, 2023, vol. 38, issue 2, 247-277

Abstract: This study investigates the effect of various types of trade impediments on Indonesia's trade flows. We categorize tariff measures, non-tariff measures (NTMs), and the lack of trade facilitation measures into at-the-border and behind-the-border barriers. A gravity model is applied to a panel dataset covering 177 of Indonesia's trade partners from 2007 to 2016. This study shows that Indonesia's trade protection remains high, particularly due to the increasing use of NTMs. Furthermore, the lack of trade facilitation also contributes to increasing trade costs, particularly those associated with trade logistics and administration. We also demonstrate why feasible generalized least square is preferable to ordinary least squares and pseudo-Poisson maximum likelihood when estimating a gravity model using panel data that are auto-correlated and contain a large number of zero observations.

Keywords: Indonesian economy; non-tariff measures; trade facilitation; gravity model (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0874

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