PATTERNS AND DETERMINANTS OF INTRA-INDUSTRY TRADE: CASE FOR INDONESIA AND ITS TRADING PARTNER UNDER REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP) FRAMEWORK

  • Rossanto Dwi handoyo, Maretha Roseline Syahnie

Abstract

This study analyzes the patterns and determinants of intra-industry trade (IIT) during the period 2010-2017 between Indonesia and trading partner countries under Regional Comprehensive Economic Partnership (RCEP), consists of Malaysia, Singapore, Thailand, Vietnam, Philippines, Cambodia, China, Japan, South Korea, India, Australia and New Zealand. The analyzes divided into three groups which are primary product, manufacture, and total commodity based on Standard International Trade Classification (SITC). The Grubel- Lloyd Index is used to calculate intra-industry trade and the Generalized Method of Moments (GMM) method is used to analyze dynamic panel data. The results showed that trade patterns were dominated by intra-industry trade compared to inter-industry trade. Determinants in the form of average Gross Domestic Product (GDP) has a significant positive effect in primary product and manufacturing IIT but has negative effect in total IIT. Distance has a significant negative effect on primary product and manufacturing IIT but has a positive effect in total IIT. Research & Development (R&D) has a significant positive effect on IIT in all groups. Foreign Direct Investment (FDI) has a significant negative effect on primary product and manufacturing groups but has a positive effect on overall total IIT.

Published
2020-06-06