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The Impact of Trade Liberalization on the Soybean Economic Performance in Indonesia

The Impact of Trade Liberalization on the Soybean Economic  Performance in Indonesia
Muhammad Firdaus,  M. Iksan Semaoen, Nuhfil Hanani AR, Syafrial

ABSTRACT

This study  intended to analyze the impact of trade liberalization on Indonesia soybean economic performance. Econometric model of Indonesia soybean economy was built through the simultaneous equations system.  Parameter estimation  was  Two Stage Least Square method (2SLS). Forecasting performance and the  formulation of policy alternatives was done by using the ex-ante simulation. The results showed as follow: (1)  the main  producers and  exporters of  soybeans  are  the U.S., Brazil,  and  Argentina,  while  the main  soybean  importer are China, Japan, and Germany, (2) full liberalization of world trade causes the rise of world soybean  imports,  and  the  reduced  of world  soybean  exports  cause  the world  soybean prices  increase.  For Indonesia,  although the world soybean prices rise, but due to the implementation of full trade liberalization the price of  imported soybeans become cheaper  and  resulting in falling prices and rising imports, and  (3)  the increased  China imports and the decline in U.S. soybean production  has  increased  the  world soybean prices. For  Indonesia, raising the world soybean prices led to rising soybean import prices so domestic prices of soybean  rises and soybean imports decline.
Keywords: trade liberalization, econometric models, simulation  download full teks

 

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