GREEN TRANSITION RISKS ON EXPORT COMPETITIVENESS: CIRCULAR ECONOMY APPROACH

Arnita Rishanty, Maxensius Tri Sambodo () and Retno Wicaksono
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Maxensius Tri Sambodo: Badan Riset dan Inovasi Nasional

No WP/14/2022, Working Papers from Bank Indonesia

Abstract: Transition risks include market and reputational risks, if materialized, can result in loss of markets. This study pictures the dynamics of potential export market movement and transition as the consumer preference for green products grows globally. We find that the export market for Indonesia’s superior commodities increased due to past global growth and past increase in global demand for particular products, while still lacking in real product competitiveness. Under the scenario that illustrates the green agenda only arise mostly from developed countries and still limited from developing countries, it is estimated that the export market transition towards the new balance would find an equilibrium. Subsequently, this study exploratively discusses undergoing efforts in the exporting industry to make a green transition. We elaborate opportunities and challenges to circular economy adoption for the exporting industry. It is suggested for Indonesia' s trade diplomacy to not only maintaining market position in traditional markets, but also in seizing non-traditional markets, including markets that reject Indonesian products by improving the competitiveness of Indonesia's export products via circular economy adoption.

Keywords: Circular economy; Markov Model; competitiveness; green taxonomy (search for similar items in EconPapers)
JEL-codes: C5 O1 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2022
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-sea
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