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Journal of Economic Integration 2023 June;38(2) :247-277.
DOI: https://doi.org/10.11130/jei.2023.38.2.247
Trade Impediments in Indonesia

Barli Suryanta 1 and Arianto Arif Patunru 2

1School of Business and Management, Bandung Institute of Technology (ITB), Indonesia
2Arndt-Corden Department of Economics, Australian National University, Australia
Corresponding Author: Barli Suryanta ,Email: barli.suryanta@sbm-itb.ac.id
Copyright ©2023 Journal of Economic Integration
ABSTRACT
This study investigates the effect of various types of trade impediments on Indonesia's trade flows. We categorize tariff measures, non-tariff measures (NTMs), and the lack of trade facilitation measures into at-the-border and behind-the-border barriers. A gravity model is applied to a panel dataset covering 177 of Indonesia's trade partners from 2007 to 2016. This study shows that Indonesia's trade protection remains high, particularly due to the increasing use of NTMs. Furthermore, the lack of trade facilitation also contributes to increasing trade costs, particularly those associated with trade logistics and administration. We also demonstrate why feasible generalized least square is preferable to ordinary least squares and pseudo-Poisson maximum likelihood when estimating a gravity model using panel data that are auto-correlated and contain a large number of zero observations.

JEL Classification
F13: Trade Policy; International Trade Organizations
F14: Empirical Studies of Trade
F15: Economic Integration
Keywords: Indonesian economy | non-tariff measures | trade facilitation | gravity model
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