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Bulletin of Monetary Economics and Banking

Document Type

Article

Abstract

This study analyzes the effects of structural economic movement on the change of indonesia’s exports and examines the validity of the ignacy theory concerning structural economic movement in relation to the changes of of export composition. The study utilize an ordinary mechanism of WLS, namely the Wald model.The estimation resulted through the combination of ECM and WLS shows that the price of export goods/merchandises has a positive effect and is significant in the short-term. Yet, over the long-term period, the increase in export commodity price causes the decrease in export volumes. Meanwhile, the relationship between export volume and inflation is not significant, either in the short-term or long-term. Foreign exchange interestingly has a positive and significant relationship with the export volume over a short-term period, but in the long-term it has a reverse effect, that is, it decreases export volume. Foreign investment has a positive and significant relationship with export volume in the long-term, the significance, however, weakens over the short-term period.The structural economic movement has a positive and significant relationship over a short-term period with export volume, but over long-term period the relationship is not statistically strong. Thus, the structural economic movement towards more on the growth of industry sector could stimulate the growth in export aggregately. This evidence provides further support on the Ignacy theory (1980) if it is applied on Indonesian international economy, especially for the period of 1983-1997.JEL Classification: C32, F14, O24Keyword: Weighted Least Square, Error Correction Model, Structural Economic Movement, Export Change

First Page

329

Last Page

348

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Indonesia

Affiliation

University of Jember

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