Identification, competitiveness analysis, and the factors affecting trade flow of main commodities export indonesia to the european union

Abstract

The aims of this study are to identify the Indonesia’s main export commodities to the European Union, the level of competitiveness and the degree of integration, and also to determine the trade flow of Indonesia’s main export commodities to the European Union. This study use the sorting method to know the highest export value during the year 2009 as Indonesia's main export commodity to the European Union. Further analysis using the Revealed Comparative Advantage index, Intra-Industry Trade index and gravity model to answer the research objectives. The results showed that Indonesia's main export commodities to the European Union market has a highly competitive and high level of integration. In the aggregate, Indonesia's main export commodities to the European Union market, showed that the flow trade significantly affected by the export of these commodities in the previous year, while the other factors as Indonesia's real GDP (Gross Domestic Product), real GDP of export’s destination countries, GDP per capita of the export’s destination country, real exchange rate of rupiah against the currencies of export’s destination countries, and economic distance has a different level of significance in each commodity.