The Effect of Exports and Imports on Agribusiness Activities on the Development of Indonesia's Economic Growth

Enhancing the agricultural sector plays a vital role in strengthening Indonesia's economic growth. This study aims to examine the impact of agricultural exports, imports, and investment on the development of the agricultural sector, as reflected in economic growth. The analysis covers the period from 2000 to 2015 using quarterly time series data. The research applies the vector autoregression (VAR) method. Findings from the causality analysis indicate that exports, imports, and investment in agriculture have a limited influence on agricultural sector growth indicators. However, growth in the agricultural sector significantly influences the levels of exports, imports, and investment in economic growth indicators. Additionally, the impulse response analysis reveals that investment responds more strongly to shocks in the agricultural sectors in Economic growth indicators compared to exports and imports. The variance of decomposition analysis shows that exports contribute more to the development of the agricultural sector than the combined contribution of imports and investment. This study has concluded that the full value of exports, imports, and investment in the agricultural sector does not significantly impact the economic growth rate; however, the rate of growth in the agricultural sector affects the full value of sector exports, imports, and investment in Indonesia. In addition, the authors recommended that the government strengthen the Indonesian economy by boosting exports and minimizing imports. This can be achieved by expanding export markets and enhancing the quality of locally produced goods. A trade surplus, where exports exceed imports, can contribute positively to the nation by increasing foreign exchange reserves.