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Regional Economic Integration And Its Impacts On Growth, Poverty, And Income Distribution: The Case Of Indonesia

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  • Djoni Hartono
  • Dominicus Savio Priyarsono
  • Tien Dung Nguyen
  • Mitsuo Ezaki

Abstract

Indonesia continually tries to open its economy through free trade areas (FTAs) on bilateral, regional, and multilateral bases. This paper discusses the impacts of FTAs on the Indonesian economy, particularly for economic growth, poverty, and income distribution. By using a Global Computable General Equilibrium (GCGE) model, we conducted the simulation analysis by setting eighteen scenarios for the ongoing and potential FTAs of different frameworks. Indonesia is found to benefit from joining in FTAs, except for the FTA with India. It is also implied that FTAs increase rural household income at higher rates than they increase urban household income. Moreover, FTAs' impacts are more favorable for unskilled workers than for skilled ones, and also for relatively poor households more than for rich households, both in urban and rural areas. In brief, FTAs provide Indonesia with income redistribution effects.

Suggested Citation

  • Djoni Hartono & Dominicus Savio Priyarsono & Tien Dung Nguyen & Mitsuo Ezaki, 2007. "Regional Economic Integration And Its Impacts On Growth, Poverty, And Income Distribution: The Case Of Indonesia," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 19(2), pages 138-153, July.
    • Handle: RePEc:bla:revurb:v:19:y:2007:i:2:p:138-153
    DOI: 10.1111/j.1467-940X.2007.00131.x
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    References listed on IDEAS

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    1. Tien Dung Nguyen & Misuo Ezaki, 2005. "Regional Economic Integration And Its Impacts On Growth, Poverty And Income Distribution: The Case Of Vietnam," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 17(3), pages 197-215, November.
    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. repec:dau:papers:123456789/6497 is not listed on IDEAS
    4. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    5. Tien Dung Nguyen & Mitsuo Ezaki, 2006. "Regional Economic Integration and Its Impacts on Growth, Poverty and Income Distribution: The Case of Vietnam," World Scientific Book Chapters, in: Masayuki Doi (ed.), Computable General Equilibrium Approaches In Urban And Regional Policy Studies, chapter 17, pages 381-409, World Scientific Publishing Co. Pte. Ltd..
    6. 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.
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    Cited by:

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    2. Bhattacharyay, Biswa Nath & Mukhopadhyay, Kakali, 2015. "A comprehensive economic partnership between India and Japan: Impact, prospects and challenges," Journal of Asian Economics, Elsevier, vol. 39(C), pages 94-107.
    3. Bussolo, Maurizio & Lim, Jamus Jerome & Maliszewska, Maryla, 2014. "The Rise of Developing Countries and the Future of Global Saving and Investment," Conference papers 332532, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Cai, Songfeng & Zhang, Yaxiong & Meng, Bo, 2015. "Spillover effects of TTIP on BRICS economies : a dynamic GVC-based CGE model," IDE Discussion Papers 485, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. Jeong-Soo OH & Phouphet Kyophilavong, 2015. "Trade Liberalization and Poverty in Developing Countries: Literature Survey," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(2), pages 86-94, Fabruary.
    6. 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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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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