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THE COMPETITIVENESS CHALLENGE IN EAST JAVA UNDER THE ASEAN ECONOMIC COMMUNITY DISRUPTIVE ERA
Corresponding Author(s) : Ermita Yusida
Humanities & Social Sciences Reviews,
Vol. 7 No. 6 (2019): November
Abstract
Purpose of the study: According to the data, there have been some competition challenges in Indonesia’s sub-national level under the ASEAN Economic Community (AEC) scheme. Thisresearchaimsto examines the challenge of competitiveness in East Java, Indonesia, after the implementation of AEC.
Methodology: This research implements the comparative advantage using Revealed Comparative Advantage (RCA) Analysis which is measured by calculating the share of export value of East Java products to total exports to the importing country. It can be known as the quantitative ability or inability to compete in the importer country in the world.
Main Findings: The diversification of new commodities has become a potential outcome. Provinces that have higher advanced in international trade will gain more from trade than those which have limited access from trade. Agriculture products and their supply chain in East Java benefit more as they are the region’s specialization compare to other commodities.
Applications of this study: The results of this study can be taken into consideration for better policy recommendations and can be a benchmark for other provinces in Indonesia as well as another region that mainly depends on the agriculture sector. Specializing the comparative advantages will be substantial to gain from trade because the majority of export growth is competitive under the Asean Economic Community disruptive era.
Novelty/Originality of this study: Conducting research on comparative advantage dynamics is essential and relatively new for East Java as international trade is important variables in influencing the regional economic growth.
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- Acemoglu, D. (2009). Introduction to Modern Economic Growth. Princeton University Press. New Jersey.
- Aghion, P. dan P. Howitt. (2009). The Economics of Growth. The MIT Press. Cambridge, Massachusetts, London, England.
- ASEAN Key Figures. (2018). Jakarta: ASEAN Secretariat, December 2018
- Badan Pusat Statistik-BPS (2019). East Java in Figure 2018. Published by Central Statistic Agency Indonesia.
- Balassa, B., 1965. Trade liberalization and ‘revealed’ comparative advantage. Manchester School, 33(2): 99-123. View at Google Scholar. https://doi.org/10.1111/j.1467-9957.1965.tb00050.x DOI: https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
- Balassa, B., 1989. Comparative advantage, trade policy and economic development. 1st Edn., London: Harvester/ Wheat Sheaf.
- Barro, R.J. dan Sala-i-Martin, X. (2004). Economic Growth 2nd edition. The MIT Press. Cambridge, Massachusetts, London, England.
- Dornbusch,Rudiger, Stanley Fischer, and Richard Startz (1998). Macroeconomics 7th Edition. Irwin/McGraw-Hill.
- Emiko, F. (2010). Revisiting Linkages Between Openness, Education and Economic Growth: System GMM Aproach. Journal of Economic Integration 25(1): 193-222. https://doi.org/10.11130/jei.2010.25.1.194 DOI: https://doi.org/10.11130/jei.2010.25.1.194
- Enu et. all., (2013). Impact of Macroeconomic Factors on Foreign Direct Investment in Ghana: A Cointegration Analysis. European Scientific Journal October 2013 edition vol.9, No.28 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431.
- Escribano et. all., (2009). Assessing the Impact of Infrastructure Quality on Firm Productivity in Africa: Cross†Country Comparisons Based on Investment Climate Surveys from 1999 to 2005. Working Paper 09-86, Economic Series (49): November 2009. https://doi.org/10.1596/1813-9450-5191 DOI: https://doi.org/10.1596/1813-9450-5191
- Erdós, T. (1973). Investment and Economic Growth. Acta Oeconomica 11(4): 281-303
- Green, D. J. (2008). The Role of ASEAN Economic Community as a Commitment to Policy Certainty. ASEAN Economic Bulletin 25(2): 209-227. https://doi.org/10.1355/AE25-2F DOI: https://doi.org/10.1355/AE25-2F
- Gupta, Satya Dev (2015). Comparative Advantage and Competitive Advantage: An Economics Perspective and a Synthesis. Athens Journal of Business and Economics. Vol. 1, No. 1. https://doi.org/10.30958/ajbe.1-1-1 DOI: https://doi.org/10.30958/ajbe.1-1-1
- Hseng Noan, Nang (2015) The Impact of ASEAN Transition to ASEAN Economic Community on Myanmar Economy (January 1, 2015). RSU International Journal of College of Government (RSUIJCG), Vol. 2, No. 1
- Kementerian Luar Negeri Republik Indonesia. (2015). Masyarakat Ekonomi ASEAN (MEA). https://www.kemlu.go.id/id/kebijakan/asean/Pages/Masyarakat-Ekonomi-ASEAN-(MEA).aspx
- Khee Giap Tan, Mulya Amri, Nurina Merdikawati, (2018). A New Index to Measure Ease of Doing Business at The Sub-National Level: Empirical Findings From Indonesia. Cross Cultural & Strategic Management. https://doi.org/10.1108/CCSM-01-2017-0009 DOI: https://doi.org/10.1108/CCSM-01-2017-0009
- Kurniati, Yati et.al. (2007). Faktor-faktor yang Menentukan Investasi Asing Langsung. Working paper Bank Indonesia. WP/06/2007
- Lee, J. (1995). Comparative Advantage in Manufacturing as a Determinant of Industrialization: The Korean Case, World Development, Vol. 23, No. 7, pp. 1195-1214. ISSN 0305-750X. https://doi.org/10.1016/0305-750X(95)00039-F DOI: https://doi.org/10.1016/0305-750X(95)00039-F
- Mankiw, N.G., D. Romer and D.N. Weil. (1992). A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics 107: 407-437. https://doi.org/10.2307/2118477 DOI: https://doi.org/10.2307/2118477
- Majid, M. (2016). Forging the ASEAN Economic Community, 2015 to 2016 – and Beyond. Southeast Asian Affairs 18(2): 43-54. https://doi.org/10.1355/9789814762878-006 DOI: https://doi.org/10.1355/9789814762878-006
- Sahoo, Pravakar (2006). Foreign Direct Investment in South Asia: Policy, Trends, Impact and Determinants. ADB Institute Discussion Paper No. 56
- The World Economic Forum (2018). The Global Competitiveness Index 2018. Published by The World Economic Forum.
- Tongzon, J.L. (2003). US - Singapore Free Trade Agreement: Implications for ASEAN. ASEAN Economic Bulletin 20(2): 174-178. https://doi.org/10.1355/AE20-2F DOI: https://doi.org/10.1355/AE20-2F
- Widodo, T. (2009). Comparative Advantage: Theory, Empirical Measures and Case Studies, Review of Economic and Business Studies, Vol 4, pp. 57-82. ISSN 2068-7249.
- Yasmin, B., Hussain, A., and Chaudhary, M. A. (2003). Analysis Factors Affecting Foreign Direct Investmen In Developing Countries. Pakistan Economic and Social Review, 41(1&2): 59-75.
- Yue, Ch. and Hua, P.. (2002). Does Comparative Advantage Explains Export Patterns in China?, China Economic Review, Vol. 13, No. 2, pp. 276 - 96. ISSN 1043-951X. https://doi.org/10.1016/S1043-951X(02)00073-1 DOI: https://doi.org/10.1016/S1043-951X(02)00073-1
References
Acemoglu, D. (2009). Introduction to Modern Economic Growth. Princeton University Press. New Jersey.
Aghion, P. dan P. Howitt. (2009). The Economics of Growth. The MIT Press. Cambridge, Massachusetts, London, England.
ASEAN Key Figures. (2018). Jakarta: ASEAN Secretariat, December 2018
Badan Pusat Statistik-BPS (2019). East Java in Figure 2018. Published by Central Statistic Agency Indonesia.
Balassa, B., 1965. Trade liberalization and ‘revealed’ comparative advantage. Manchester School, 33(2): 99-123. View at Google Scholar. https://doi.org/10.1111/j.1467-9957.1965.tb00050.x DOI: https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
Balassa, B., 1989. Comparative advantage, trade policy and economic development. 1st Edn., London: Harvester/ Wheat Sheaf.
Barro, R.J. dan Sala-i-Martin, X. (2004). Economic Growth 2nd edition. The MIT Press. Cambridge, Massachusetts, London, England.
Dornbusch,Rudiger, Stanley Fischer, and Richard Startz (1998). Macroeconomics 7th Edition. Irwin/McGraw-Hill.
Emiko, F. (2010). Revisiting Linkages Between Openness, Education and Economic Growth: System GMM Aproach. Journal of Economic Integration 25(1): 193-222. https://doi.org/10.11130/jei.2010.25.1.194 DOI: https://doi.org/10.11130/jei.2010.25.1.194
Enu et. all., (2013). Impact of Macroeconomic Factors on Foreign Direct Investment in Ghana: A Cointegration Analysis. European Scientific Journal October 2013 edition vol.9, No.28 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431.
Escribano et. all., (2009). Assessing the Impact of Infrastructure Quality on Firm Productivity in Africa: Cross†Country Comparisons Based on Investment Climate Surveys from 1999 to 2005. Working Paper 09-86, Economic Series (49): November 2009. https://doi.org/10.1596/1813-9450-5191 DOI: https://doi.org/10.1596/1813-9450-5191
Erdós, T. (1973). Investment and Economic Growth. Acta Oeconomica 11(4): 281-303
Green, D. J. (2008). The Role of ASEAN Economic Community as a Commitment to Policy Certainty. ASEAN Economic Bulletin 25(2): 209-227. https://doi.org/10.1355/AE25-2F DOI: https://doi.org/10.1355/AE25-2F
Gupta, Satya Dev (2015). Comparative Advantage and Competitive Advantage: An Economics Perspective and a Synthesis. Athens Journal of Business and Economics. Vol. 1, No. 1. https://doi.org/10.30958/ajbe.1-1-1 DOI: https://doi.org/10.30958/ajbe.1-1-1
Hseng Noan, Nang (2015) The Impact of ASEAN Transition to ASEAN Economic Community on Myanmar Economy (January 1, 2015). RSU International Journal of College of Government (RSUIJCG), Vol. 2, No. 1
Kementerian Luar Negeri Republik Indonesia. (2015). Masyarakat Ekonomi ASEAN (MEA). https://www.kemlu.go.id/id/kebijakan/asean/Pages/Masyarakat-Ekonomi-ASEAN-(MEA).aspx
Khee Giap Tan, Mulya Amri, Nurina Merdikawati, (2018). A New Index to Measure Ease of Doing Business at The Sub-National Level: Empirical Findings From Indonesia. Cross Cultural & Strategic Management. https://doi.org/10.1108/CCSM-01-2017-0009 DOI: https://doi.org/10.1108/CCSM-01-2017-0009
Kurniati, Yati et.al. (2007). Faktor-faktor yang Menentukan Investasi Asing Langsung. Working paper Bank Indonesia. WP/06/2007
Lee, J. (1995). Comparative Advantage in Manufacturing as a Determinant of Industrialization: The Korean Case, World Development, Vol. 23, No. 7, pp. 1195-1214. ISSN 0305-750X. https://doi.org/10.1016/0305-750X(95)00039-F DOI: https://doi.org/10.1016/0305-750X(95)00039-F
Mankiw, N.G., D. Romer and D.N. Weil. (1992). A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics 107: 407-437. https://doi.org/10.2307/2118477 DOI: https://doi.org/10.2307/2118477
Majid, M. (2016). Forging the ASEAN Economic Community, 2015 to 2016 – and Beyond. Southeast Asian Affairs 18(2): 43-54. https://doi.org/10.1355/9789814762878-006 DOI: https://doi.org/10.1355/9789814762878-006
Sahoo, Pravakar (2006). Foreign Direct Investment in South Asia: Policy, Trends, Impact and Determinants. ADB Institute Discussion Paper No. 56
The World Economic Forum (2018). The Global Competitiveness Index 2018. Published by The World Economic Forum.
Tongzon, J.L. (2003). US - Singapore Free Trade Agreement: Implications for ASEAN. ASEAN Economic Bulletin 20(2): 174-178. https://doi.org/10.1355/AE20-2F DOI: https://doi.org/10.1355/AE20-2F
Widodo, T. (2009). Comparative Advantage: Theory, Empirical Measures and Case Studies, Review of Economic and Business Studies, Vol 4, pp. 57-82. ISSN 2068-7249.
Yasmin, B., Hussain, A., and Chaudhary, M. A. (2003). Analysis Factors Affecting Foreign Direct Investmen In Developing Countries. Pakistan Economic and Social Review, 41(1&2): 59-75.
Yue, Ch. and Hua, P.. (2002). Does Comparative Advantage Explains Export Patterns in China?, China Economic Review, Vol. 13, No. 2, pp. 276 - 96. ISSN 1043-951X. https://doi.org/10.1016/S1043-951X(02)00073-1 DOI: https://doi.org/10.1016/S1043-951X(02)00073-1