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The Regional Impact Transmission via International Trade: An ASIAN-IO Approach

Author

Listed:
  • Ibrahim
  • Tri Winarno
  • Melva Viva
  • Yanfitri

    (Bank Indonesia)

Abstract

Global financial crisis which began in the US in the latter part of 2008 hit a lot of countries in both trade and finance. In trade aspect, the crisis spread widely; in Indonesia, the total export value in 2009 dropped to 14.3%. Therefore, the economy of China, tightly linked with Asian countries including Indonesia, which rapidly rose before the crisis but slowed after it should be monitored as this condition, could indirectly hold down Indonesia’s GDP. Applying RAS method to update Asian IO data, this research has attempted to describe the trade structure of Asian countries in 2010. Also, it implemented a simulation of the impact of US and China’s GDP decline and US exports on Indonesia’s GDP, both at aggregate and sector levels. The result of the mapping shows that Indonesia is getting more dependent on China. Generally, the link between Indonesia’s exported products and global production chain is weak. Indonesia’s export commodities which are mostly of intermediate goods have low contribution towards value added. Moreover, the result of the simulation shows that 1% decrease in China’s GDP has greater impact on Indonesia’s GDP (0.14%) than that of the US (0.05%) and EU (0.07%) though with similar point.

Suggested Citation

  • Ibrahim & Tri Winarno & Melva Viva & Yanfitri, 2014. "The Regional Impact Transmission via International Trade: An ASIAN-IO Approach," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 16(4), pages 315-346, April.
    • Handle: RePEc:idn:journl:v:16:y:2014:i:4:p:315-346
    DOI: https://doi.org/10.21098/bemp.v16i4.449
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    References listed on IDEAS

    as
    1. Tomoko Mori & Hitoshi Sasaki, 2007. "Interdependence of Production and Income in Asia-Pacific Economies: An International Input-Output Approach," Bank of Japan Working Paper Series 07-E-26, Bank of Japan.
    2. Buetre, Benjamin L. & Ahmadi-Esfahani, Fredoun Z., 2000. "Updating an input-output table for use in policy analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(4), pages 1-31.
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    More about this item

    Keywords

    Trade Interactions; Input Output Model.;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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