Measuring determinants and potential exports of Indonesian agricultural commodities to ASEAN

Abstract

This study was conducted to evaluate the efficiency, determining factors and exports opportunities of Indonesian agricultural commodities to ASEAN (Association of Southeast Asian Nations) for the 1997-2021 period using Stochastic Frontier Gravity Model (SFGM), followed with the Fixed Effect (FE) and Pseudo Poisson Maximum Likelihood (PPML) models to confirm the robustness of our model. The findings of this study showed that the GDP of Indonesia, as well as the GDP and population of importer countries, were stimulating factors in Indonesia’s agricultural exports to other ASEAN countries. Geographical distance and shared borders between Indonesia and importer countries have a negative impact on Indonesian exports. Other findings of this study showed that Indonesia’s agricultural commodities exports to the other 9 ASEAN member countries were inefficient, with an average TE value of 29.59%. The negative value of export potential indicates the unoptimized export performance of Indonesia’s agricultural commodities to other ASEAN countries. In the end, this study contributed to enriching the literature by evaluating efficiency and export potential, which were not widely studied in international trade economic studies As part of this study, policy recommendations for increasing Indonesia’s agricultural exports to other ASEAN countries were provided as well.