The Impacts of Indian Ocean Rim Association (IORA) Economic Integration on Indonesian Macro and Sectoral Economy

Authors(3) :-Nur Kardina Massijaya, Widyastutik, Tanti Novianti

Economic cooperation among countries aims primarily to eliminate trade barriers, including Indian Ocean Rim Association (IORA) with 21 participating members. This study is designed to examine impacts of Indian Ocean Rim Association (IORA) economic integration would have on Indonesian economy. The analysis employs the Global Trade Analysis and Policy (GTAP) model and simulates four tariff elimination scenarios. Within the analysis it has been noticed that relatively bigger tariff reduction delivers higher increase in Indonesian welfare and GDP growth. However, the overall gain has dampened due the presence of deficit in trade balance, except in simulation where 95% tariff reduction applies only on request-offer sectors. Only three sectors show consistently high competitiveness under IORA framework with increasing output and export numbers, and other sectors demand for imports remains high. All in all, the result confirm that IORA is beneficial for Indonesia in terms of welfare and growth of real GDP. On the other hand, increasing demand for imports exceeds its exports, which will lead to huge deficit in trade balance.

Authors and Affiliations

Nur Kardina Massijaya
Department of Economics, Institut Pertanian Bogor, Bogor, Jawa Barat, Indonesia
Widyastutik
International Trade Analysis and Policy Studies, Institut Pertanian Bogor, Bogor, Jawa Barat, Indonesia
Tanti Novianti
International Center for Applied Finance and Economics, Institut Pertanian Bogor, Bogor, Jawa Barat, Indonesia

IORA, GTAP, Preferential Trade Agreement, Tariff Reduction

  1. Beverelli C., S Neumueller, and R Teh. 2015. Export Diversification Effects of The WTO Trade Facilitation Agreement. World Development, 76: 293-310.
  2. Firdaus AH. 2011. Kinerja Perdagangan dan Dampak Free Trade Area (FTA) ASEAN Plus Three Terhadap Perekonomian Indonesia. [Thesis]. Bogor (ID): Departemen Ilmu Ekonomi, Institut Pertanian Bogor.
  3. Prasetyo A, S Marwanti, Darsono. 2017. Keunggulan Komparatif dan Kinerja Ekspor Minyak Sawit Mentah Indonesia di Pasar Internasional. Jurnal Agro Ekonomi, Vol. 35 No. 2, Oktober 2017: 89-103.
  4. Ragimun. 2018. Kerja Sama Perdagangan Barang pada Forum RCEP bagi Indonesia. Jurnal Ekonomi dan Kebijakan Publik Kementerian Keuangan. E-ISSN: 2528-4673. P-ISSN: 2086-6313. Vol 09 No 1. June 2018: 67-81.
  5. Santos-Paulino A and AP Thirlwall. 2004. The Impact of Trade Liberalisation on Exports, Imports, and The Balance of Payments of Developing Countries. The Economic Journal, 114 (February), F50–F72. Royal Economic Society. Malden (US): Blackwell Publishing.
  6. UNCOMTRADE. International Trade Statistics Database. Berbagai terbitan [Internet] [Downloaded on February 2018]. Available on: http://www.uncomtrade.org

Publication Details

Published in : Volume 6 | Issue 1 | January-February 2019
Date of Publication : 2019-01-30
License:  This work is licensed under a Creative Commons Attribution 4.0 International License.
Page(s) : 144-149
Manuscript Number : IJSRSET196140
Publisher : Technoscience Academy

Print ISSN : 2395-1990, Online ISSN : 2394-4099

Cite This Article :

Nur Kardina Massijaya, Widyastutik, Tanti Novianti, " The Impacts of Indian Ocean Rim Association (IORA) Economic Integration on Indonesian Macro and Sectoral Economy, International Journal of Scientific Research in Science, Engineering and Technology(IJSRSET), Print ISSN : 2395-1990, Online ISSN : 2394-4099, Volume 6, Issue 1, pp.144-149, January-February-2019. Available at doi : https://doi.org/10.32628/IJSRSET196140
Journal URL : http://ijsrset.com/IJSRSET196140

Article Preview