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The Effect of Tariffs on Imports : A Sector-Wise Analysis of Indonesia in 2001-2012

Author

Listed:
  • Ardiansyah Romadhon

    (Graduate School for International Development and Cooperation, Hiroshima University)

  • Yutaka Ito

    (Graduate School for International Development and Cooperation, Hiroshima University)

  • Keisuke Kawata

    (Graduate School for International Development and Cooperation, Hiroshima University)

  • Yuichiro Yoshida

    (Graduate School for International Development and Cooperation, Hiroshima University)

Abstract

This paper examines the validity of the commonly accepted paradigm that tariffs discourage imports in Indonesia. Specifically, this paper investigates the effect of tariffs on imports by industry using six-digit sectoral trade data for the 2001-2012 period. We also measure the welfare cost of a marginal change in tariff rates in each industry using Harberger's approach. The results show that tariffs negatively affect only certain industries, such as chemical, stone/glass, and metals, but not other industries. The findings demonstrate that in these three industries, the welfare gain from a 1% decrease in the 2012 tariff rate amounts to approximately 3% of tariff revenue.

Suggested Citation

  • Ardiansyah Romadhon & Yutaka Ito & Keisuke Kawata & Yuichiro Yoshida, 2014. "The Effect of Tariffs on Imports : A Sector-Wise Analysis of Indonesia in 2001-2012," IDEC DP2 Series 4-4, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    • Handle: RePEc:hir:idecdp:4-4
    as

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    References listed on IDEAS

    as
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    Keywords

    Tariff; Indonesian import; Harberger's approach;
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