Achieving Economic Benefits Through Agricultural Trade Reforms in Indonesia
DOI:
https://doi.org/10.21082/akp.v6n1.2008.56-74Keywords:
agricultural trade, bilateral trade, perdagangan bilateral, perdagangan pertanianAbstract
The Indonesian economy has achieved a remarkable transformation from an agricultural economy to a modern economy that is estimated to grow at a high rate of 6 per cent. Sustaining it requires the continual adoption of economic reforms. Part of it requires the adoption of freer trade practices in sectors of the economy where resources are retained due to large government assistance. This paper aims to examine the economy-wide effects of a bilateral agricultural trade liberalization program between Australia and Indonesia. The analytical framework adopted in this paper is a global general equilibrium model known as GTAP (Global Trade Analysis Project). Increasing the agricultural trade between Australia and Indonesia will lead to benefits arising from higher incomes and resource allocation efficiency. In this study, the removal of tariffs on agricultural imports in Indonesia resulted in efficiency gains of US$ 1.67–3.35 million and GDP increase by US$ 3.55–7.08 million. This shows that freer trade practices contribute to the economic growth process in Indonesia.
Downloads
References
Andayani, R.M and Tilley, D.S. 1997, Demand and competition among supply resources: The Indonesian fruit import market, Journal of Agricultural and Applied Economics, vol. 29, No.2, pp. 279−289.
Barbier, E. 1989. Cash Crops, Foods, Crops, and Sustainability : The Case of Indonesia. World Development, vol. 17, no.6, pp. 879-895.
Fabiosa, J.F. 2005, Growing Demand for Animal-Protein Source Products in Indonesia: Trade Implications, Working Paper 05-WP400, CARD, Iowa, Ames.
Fabiosa, J.F. 2006, Westernization of the Asian Diet: The Case of Rising Wheat Consumption in Indonesian, Working Paper 06-WP422, CARD, IOWA, Ames.
Hertel. T.W. 1997. Global Trade Analysis : Modeling and Applications. Cambridge University Press. New York.
Hutasuhut, M., Chang, H.S, Griffith, G., O’Donnel, C. and Doran, H. 2001, The Demand for Beef in Indonesia: Implications for Australian Agribusiness, Working Paper No. 2001-4, University of New England, Armidale.
Kowaltcyzk, C. 2000, ‘Welfare and integration’, International Economic Review, vol. 41, no.2, pp.483 –492.
Nakajima, T. 2002. An Analysis of the Economic Effects of Japan-Korea FTA : Sectoral Aspects.Economic Research Institute for Northeast Asia. Japan. http://www.erina.or.jp/en/Research/dp/pdf/0202e.pdf.
