Analysis of Macro Economic Influence on Indonesian Trade

Abstract

This study aims to analyze the influence of macroeconomic factors on Indonesia's international trade. The variables in this study are trade values, exchange rates, exports, imports, Gross Fixed Capital Formation (GFCF), Gross Domestic Income (GDP), and foreign investment (FDI). The method used in this study is the Vector Error Correction Model (VECM). The VECM method is used in the analysis of long- and short-term relationships. The relationship studied is between the independent and dependent variables in the time series data. To find out the long-term relationship in research, researchers must analyze through the cointegration equation on the VECM test results. The data used in this study is time series data for 1991-2020 taken from World Development Indicators and the Indonesian Central Bureau of Statistics. Based on the results of the short-term analysis of the GFCF variable, imports and exports have no effect on the value of trade in Indonesia. While the FDI, GDP and import variables have a significant effect on the value of trade. In the long term, the variables of exchange rates, imports, GFCF, and FDI have a positive and significant effect on the value of trade in Indonesia.