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Regional Economic Integration and its Impacts on Growth, Poverty and Income Distribution: The Case of Indonesia

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Author Info

  • Djoni Hartono

    ()
    (Department of Economics, University of Indonesia)

  • D.S. Priyarsono

    (Bogor Agriculture University)

  • Tien Dung Nguyen

    (Ministry of Trade, Vietnam)

  • Mitsuo Ezaki

    (Nagoya University)

Abstract

Indonesia is facing the trade liberalization and regional economic integration with several free trade areas, i.e. bilateral FTA, regional FTA and multilateral FTA. The aim of this paper is to analyze the impact of those international relationships on Indonesian economic growth, poverty and income distribution. By using a Global Computable General Equilibrium (GCGE) model, we made eighteen simulations to analyze the current and the potential international relationship that is faced by Indonesia. Generally, Indonesia gains significant benefit in terms of real GDP, output and welfare except FTA with India. FTA also increases the household income of rural group higher than the urban group ones. Unskilled labor experiences more advantages than skilled labor and poor household gain more benefit than the rich household both in rural and urban areas. Those conditions imply that FTA potentially could be a solution for national poverty reduction.

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File URL: http://lp3e.fe.unpad.ac.id/wopeds/200703.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Department of Economics, Padjadjaran University in its series Working Papers in Economics and Development Studies (WoPEDS) with number 200703.

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Length: 45 pages
Date of creation: Mar 2007
Date of revision: Mar 2007
Handle: RePEc:unp:wpaper:200703

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Keywords: Economic integration; Indonesia;

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References

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  1. Mohamed Hedi Bchir & Yvan Decreux & Jean-Louis Guérin & Sébastien Jean, 2002. "MIRAGE, a Computable General Equilibrium Model for Trade Policy Analysis," Working Papers 2002-17, CEPII research center.
  2. Hiro Lee & Dominique van der Mensbrugghe, 2001. "A General Equilibrium Analysis of the Interplay between Foreign Direct Investment and Trade Adjustments," Discussion Paper Series 119, Research Institute for Economics & Business Administration, Kobe University, revised Jul 2001.
  3. Hiro Lee & Dominique van der Mensbrugghe, 2001. "A General Equilibrium Analysis of the Interplay between Foreign Direct Investment and Trade Adjustments," Discussion Paper Series 119, Research Institute for Economics & Business Administration, Kobe University, revised Jul 2001.
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Cited by:
  1. Gumilang, Howard & Mukhopadhyay, Kakali & Thomassin, Paul J., 2011. "Economic and environmental impacts of trade liberalization: The case of Indonesia," Economic Modelling, Elsevier, vol. 28(3), pages 1030-1041, May.

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