IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Sub-Regional Economic Cooperation In Southeast Asia : ITRO’s Effect to Rubber’s FDI Inflows & Indonesia’s Rubber Economic Multipliers

Listed author(s):
  • Kiki Verico


    (Faculty of Economics, University of Indonesia)

  • Williater Leonardo Batubara

    (Directorate for Export & Import Facilitation, Ministry of Trade Republic of Indonesia)

One of the valuable lesson learnt that region like ASEAN could learn from the experience of the most successful economic regional integration process (the European Union) is her forerunner sub-regional cooperation named the European Coal and Steel Community (ECSC) from 1952-1957. This organization called sub-regional because she was established by founding members of EU, a limited number of the EU’s members. It managed particular primary commodities from production to trade sides. Its cooperation was considered as an important factor on why EU could have closed economic relations. In Southeast Asian, ASEAN has similar organization. It was a subregional type because it had been established by limited founding members of ASEAN: Indonesia, Malaysia & Thailand. It also manages particular primary products, a natural rubber, from both sides: production & trade. Its name is ITRO (International Tripartite Rubber Organization).The most different factor between ITRO & ECSC is the establishment period on its regional organization’s establishment. ECSC was a forerunner for the EU since it was established before the EU while ITRO was established after the establishment of ASEAN. This article assumes that ITRO still has an effect on the trade and investment relations for its members which were similar to the ECSC. Strong trade & investment relations will give significant effect for enhancing economic cooperation among the members. This article attempts to prove the effect of ITRO establishment to the trade and investment relations among its members (Indonesia, Malaysia & Thailand). It tries to see how ITRO which represented by dummy of establishment’s time affect Foreign Direct Investment (FDI) inflows of natural rubber in Indonesia, Malaysia & Thailand. Dummy of time is time of the launch of the International Tripartite Rubber Organization (ITRO). It was in 2001. ITRO controls around 68% of world rubber production and 60% of world rubber exports. This article uses two approaches: macro & micro tools. For macro approach this article applies econometric model with panel data approach to estimate the effect of ITRO to FDI inflows on rubber together with other independent macroeconomic variables: real GDP, real exchange rate, degree of openness and production of rubber as an approach to natural rubber production. For micro approach this article applies input & output (I-O) analysis of the impact of rubber product to Indonesia’s economy comparing I-O year 2000 and I-O year 2005.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Article provided by Faculty of Economics and Business, University of Indonesia in its journal Economics and Finance in Indonesia.

Volume (Year): 58 (2010)
Issue (Month): (August)
Pages: 173-195

in new window

Handle: RePEc:lpe:efijnl:201009
Contact details of provider: Phone: (021)-7272425
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:lpe:efijnl:201009. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Muhammad Halley Yudhistira)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.