Partners or Predators? The Impact of Regional Trade Liberalization on Indonesia

44 Pages Posted: 20 Apr 2016

See all articles by Sherman Robinson

Sherman Robinson

International Food Policy Research Institute (IFPRI)

Jeffrey D. Lewis

World Bank - East Asia and Pacific Region

Date Written: July 1996

Abstract

The authors empirically assess regional integration and liberalization scenarios impact on Indonesia and other Pacific Rim economies, including the complete Uruguay Round, further global liberalization and the creation of the Association of Southeast Asian Nations (ASEAN) or Asia-Pacific Economic Cooperation (APEC) free trade areas. They consider how major international exchange rate realignments affect the world trade pattern, and Indonesia in particular. The analysis uses a multi-country, computable general equilibrium (CGE) model to quantify the trade liberalization impact on countries, sectors, and factors. The extended APEC-CGE model consists of nine linked country models: Indonesia, Malaysia, and Singapore (together), the Philippines, Thailand, China (including Hong Kong), Korea and Taiwan, Japan, the United States and the European Union. Each country model is linked through explicit bilateral trade flows modeling for each traded sector. The empirical results lead to several conclusions: a) eliminating tariff and non tariff barriers in industrial countries (especially the Multifibre Agreement) gives Asian developing countries the opportunity to expand exports and achieve productivity gains; b) creation of an APEC free trade area gives participants significant benefits, with little effect on nonmembers while creation of an ASEAN free trade area gives its members little benefit, thus ASEAN countries should work toward more liberalization under GATT or hasten the APEC free trade area creation; c) all economies gain the most from further multilateral liberalization; and d) major exchange rate realignments significantly affect bilateral trade balances and world trade volume and direction. However, they have less effect than trade liberalization on the internal production and trade structure. Sectoral protection and subsidy rates vary greatly and their elimination yields significant efficiency gains. Changes in exchange rates have less effect.

Suggested Citation

Robinson, Sherman and Lewis, Jeffrey D., Partners or Predators? The Impact of Regional Trade Liberalization on Indonesia (July 1996). Available at SSRN: https://ssrn.com/abstract=636113

Sherman Robinson (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Jeffrey D. Lewis

World Bank - East Asia and Pacific Region

Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/jlewis

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
424
Abstract Views
1,825
Rank
126,497
PlumX Metrics