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Regional Economic Integration and its Impacts on Growth, Poverty and Income Distribution: The Case of Indonesia

Author

Listed:
  • Djoni Hartono

    (Department of Economics, University of Indonesia)

  • D.S. Priyarsono

    (Bogor Agriculture University)

  • Tien Dung Nguyen

    (Ministry of Trade, Vietnam)

  • Mitsuo Ezaki

    (Nagoya University)

Abstract

Indonesia is facing the trade liberalization and regional economic integration with several free trade areas, i.e. bilateral FTA, regional FTA and multilateral FTA. The aim of this paper is to analyze the impact of those international relationships on Indonesian economic growth, poverty and income distribution. By using a Global Computable General Equilibrium (GCGE) model, we made eighteen simulations to analyze the current and the potential international relationship that is faced by Indonesia. Generally, Indonesia gains significant benefit in terms of real GDP, output and welfare except FTA with India. FTA also increases the household income of rural group higher than the urban group ones. Unskilled labor experiences more advantages than skilled labor and poor household gain more benefit than the rich household both in rural and urban areas. Those conditions imply that FTA potentially could be a solution for national poverty reduction.

Suggested Citation

  • Djoni Hartono & D.S. Priyarsono & Tien Dung Nguyen & Mitsuo Ezaki, 2007. "Regional Economic Integration and its Impacts on Growth, Poverty and Income Distribution: The Case of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 200703, Department of Economics, Padjadjaran University, revised Mar 2007.
    • Handle: RePEc:unp:wpaper:200703
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    References listed on IDEAS

    as
    1. 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..
    2. 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.
    3. 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.
    4. repec:dau:papers:123456789/6497 is not listed on IDEAS
    5. repec:fth:kobeeb:119 is not listed on IDEAS
    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.
    7. 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.
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    Cited by:

    1. 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.
    2. 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.
    3. Phouphet Kyophilavong & Xaignasack Lassachack & Thanouxay Volavong, 2016. "Do cash transfers help the poor during trade liberalization? Evidence from Laos," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 19(4), pages 355-371, December.
    4. 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.
    5. 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).
    6. 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.

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    JEL classification:

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

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