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Tariff reform and income inequality in Indonesia

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  • Yessi Vadila
  • Budy P. Resosudarmo

Abstract

We investigate the impact of tariff reform—which serves as the main instrument of trade liberalisation—on income inequality in Indonesia, using a panel dataset of 26 provinces for the period of 1977–2012. Our study provides evidence from a long period of trade liberalisation analysis and offers some valuable insights into the nexus between trade liberalisation and income distribution. We find that relative inequality was reduced more in provinces that had more exposure to input tariff liberalisation. Furthermore, the results also suggest that tariff cuts play an important part in poverty reduction. Se investiga el impacto de la reforma arancelaria, que funciona como el principal instrumento de liberalización del comercio, sobre la desigualdad de ingresos en Indonesia, mediante el uso de un panel de datos de 26 provincias para el período 1977–2012. Este estudio proporciona pruebas de un largo período de análisis de la liberalización del comercio y ofrece algunas ideas valiosas sobre el vínculo entre la liberalización del comercio y la distribución de los ingresos. Se encontró que la desigualdad relativa se redujo más en las provincias que estaban más expuestas a la liberalización de los aranceles sobre insumos. Además, los resultados también sugieren que los recortes arancelarios desempeñan un papel importante en la reducción de la pobreza. 本稿では、インドネシアの26の州の1977~2012年のパネルデータセットを用いて、貿易自由化の主要な手段となる関税改革が同国における所得不平等に及ぼす影響を検討する。本研究から、貿易自由化の長期的な分析から得られたエビデンスと、貿易自由化と所得分配の関連性に関する貴重な見解が示される。相対的不平等は、投入財関税の自由化の影響を受けやすい地方ほうが少なかった。さらに、この結果から、関税削減が貧困の削減に重要な役割を果たすことが示唆される。

Suggested Citation

  • Yessi Vadila & Budy P. Resosudarmo, 2020. "Tariff reform and income inequality in Indonesia," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(3), pages 455-475, June.
  • Handle: RePEc:bla:rgscpp:v:12:y:2020:i:3:p:455-475
    DOI: 10.1111/rsp3.12253
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