The Analysis of Causality Relationship Between Export and Economic Growth in Indonesia Year 1986:1-2003:4 Using ARDL Approach
Abstract
Indonesia as less developed country (LDC) still needs much investment to
encourage the production especially in export goods. By encouraging the export, it
will stimulate the economic growth. Especially in recent condition, Indonesia
directly affected by the globalization. Where there are many foreign goods enter
the Indonesia's market and compete with domestic goods. In this case, the
domestic products lose from the foreign product. It indicates that Indonesia not
ready competes in global market and the product itself still lack of product-based
export quality.
The objective of this research is to know what the relationship between the
export and economic growth in Indonesia. Is there bidirectional causality or
unidirectional causality between export and economic growth? To answer this
question, the researcher was applying the Granger Causality Test combined with
Error Correction Model based ARDL approach by Pesaran and Shin. The data
used in this research were export and economic growth taken from Indonesia
Statistic Center Bureau (BPS), Indonesia Export-Import Bureau (BEXI), and
Bank Indonesia for the period 1986:1-2003:4.
The result was that there was bidirectional causality from export to
economic growth and inversely economic growth to export. From the result can be
concluded that the presence of export positively influence to economic growth.
Even the export stronger affects economic growth than economic growth affect
export.
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