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How to measure bilateral economic relations? Case of Indonesia – Australia

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  • Kiki, Verico

Abstract

Indonesia and Australia had agreed to seal the deal for a bilateral economic agreement entitled Indonesia-Australia Comprehensive Economic Partnership Agreement (IA CEPA). After about ten years since both countries committed to having a bilateral agreement, IA CEPA had entered into force on July 5th, 2020. This paper has two aims. Firstly, assessing potential trade and long-run investment relations with the combination of RCA (Revealed Comparative Advantage) and CMSA (Constant Market Share Analysis) with ToT (Terms of Trade) and Net Export (NX) as the filter. Secondly, measuring the potential impacts from tariff rate elimination utilizing the GTAP (Global Trade Analysis Project) model. This paper finds that both countries have complementarity relations that Indonesia can gain to improve manufacturing productivity, and Australia can benefit from sunrise to sunset relations. This paper proves that CEPA matches their need to increase their economic benefits, revealed that they could share mutual benefits and sustainable economic relations.

Suggested Citation

  • Kiki, Verico, 2020. "How to measure bilateral economic relations? Case of Indonesia – Australia," MPRA Paper 104688, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:104688
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    References listed on IDEAS

    as
    1. Kiki, Verico, 2020. "How to measure bilateral economic relations? Case of Indonesia – Australia," MPRA Paper 104688, University Library of Munich, Germany.
    2. Kiki Verico, 2017. "The Future of the ASEAN Economic Integration," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-59613-0.
    3. Masato Nishiwaki, 2016. "Horizontal mergers and divestment dynamics in a sunset industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 961-997, November.
    4. Nishiwaki, Masato, 2008. "Horizontal Mergers and Divestment Dynamics in a Sunset Industry," MPRA Paper 21812, University Library of Munich, Germany.
    5. Verico, Kiki, 2012. "The Impact of Intra Regional Trade Agreement on FDI Inflows in Southeast Asia: Case of Indonesia, Malaysia and Thailand," MPRA Paper 42087, University Library of Munich, Germany, revised 20 Oct 2012.
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    Cited by:

    1. Kiki, Verico, 2020. "How to measure bilateral economic relations? Case of Indonesia – Australia," MPRA Paper 104688, University Library of Munich, Germany.
    2. Kiki Verico, 2021. "Mega-Regionalism in Southeast Asia - Single- and Dual-Track Options for ASEAN Member States," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 3(Early Vie), pages 1-5.

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    More about this item

    Keywords

    Bilateral Country Studies; Trade Policy; CGE GTAP; FDI analysis; Indonesia Australia;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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