THE DYNAMICS SPILLOVER OF TRADE BETWEEN INDONESIA AND ITS COUNTERPARTS IN TERMS OF AFTA 2015 : A MODIFIED GRAVITY EQUATION APPROACH

• Main Author: Barli Suryanta
• Format: Article
• Language: Indonesian
• Published: Bank Indonesia 2012-12-01
• Series: Bulletin Ekonomi Moneter dan Perbankan
• Online Access: https://www.bmeb-bi.org/index.php/BEMP/article/view/422
• ISSN: 1410-8046; 2460-9196

The forthcoming 2015, ASEAN is being confident to implement ASEAN Free Trade (AFTA). The existence of AFTA is to outstrip trade liberalization due to augment trade volume significantly and transaction easing as well among the members of AFTA, mainly by inducing lower tariffs some certain commodities up to 0%. This paper is conducted in order to examine on what prominent commodity of Indonesia compared to its counterparts namely Brunei, Malaysia, Philippines, Singapore and Thailand. These Indonesia counterparts are selected therefore they were the founding of ASEAN. Furthermore, this paper utilizes a modified Gravity Equation model. This model has an effort to estimate the significance of some parameters of variable from model equation. Thus, it can be detected that what are from these variables from a model equation being as a key determination factor to influence trading transactions. This paper also assesses the adjusted R-squared due to which Indonesia counterparts incur some vantage points as well as beneficial for Indonesia in terms of AFTA. The novelty contribution of this paper is to reveal the dynamics trade spillover between Indonesia some strategic sectors and its counterparts. By doing so, Indonesia is expected to be a dominant player in AFTA 2015 and taking some advantageous from AFTA into Indonesia account.   Keywords: AFTA 2015, a modified gravity equation model, analysis of data panel JEL Classification: C33, C51, F15