Analysis of investment and international trade on the Gross Domestic Product of the fisheries sector in Indonesia: evidence from the Panel Vector Autoregressive (P-VAR) Model

Abstract

The aim of this study is to identify the dynamics of Gross Domestic Product growth in the Indonesian fisheries and marine sector. This is important to study considering that Indonesia is a country that has abundant marine wealth but faces several challenges such as production quality, investment growth, global uncertainty, and the international trade cycle. Thus, this study considers several variables, namely the GDP of the fisheries and marine sector, domestic investment, foreign direct investment, imports and exports of the fishery sector, and the volume of production in the fisheries sector. The research method used is a panel vector autoregression (P-VAR) model involving impulse response functions and variance decomposition tests. The results of the P-VAR estimation suggest that the variables that have a significant impact on the GDP of the Indonesian fishery sector are the GDP of the fishery sector itself, domestic investment, foreign direct investment, exports of the fishery sector, and the volume of production in the fishery sector. The results of the study indicate the need for implementing policies that are in accordance with the dynamics of the marine economy through coordination of all upstream and downstream sectors; developing and advancing the industrialization of fishery products; fulfilling international product standards; increasing the quantity and quality of environmentally friendly production; improving fishermen’s welfare; and implementing related policies in international trade.