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Recovery and Beyond: Enhancing Competitiveness to Realise Indonesia's Trade Potential

Author

Listed:
  • Margit Molnar

    (OECD)

  • Molly Lesher

    (OECD)

Abstract

As Indonesia recovered from the 1997-98 Asian Financial Crisis, the economy underwent significant political and structural changes, and the role of trade policy evolved. It is clear that there is much scope for trade to enhance economic growth. However, there remain significant challenges in realising this potential, including the need to improve external competitiveness. This paper analyses Indonesian trade policy following the crisis, and identifies some key reforms that may help to increase competitiveness. In view of the evolving domestic and global environment, a comprehensive policy approach will be required involving trade policy reform moving in tandem with reforms in other policy areas. Suggested reforms include, among others, complementing applied tariff cuts with reductions in non-tariff barriers and bound tariffs, reducing trade costs by easing behind-the-border regulations, and further improving the investment climate.

Suggested Citation

  • Margit Molnar & Molly Lesher, 2008. "Recovery and Beyond: Enhancing Competitiveness to Realise Indonesia's Trade Potential," OECD Trade Policy Papers 82, OECD Publishing.
  • Handle: RePEc:oec:traaab:82-en
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    File URL: http://dx.doi.org/10.1787/227205773037
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    Keywords

    Asian crisis; backward linkage; comparative advantage; competitiveness; FDI; forward linkage; horizontal linkages; Indonesia; micro data; productivity; spillovers; textiles;

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