Abstract

Import becomes one of the components to calculate economic growth. During 1981-2014, a series of variation in Indonesia import has occured. In addition, the increase of GDP, the occurrence of domestic economic shocks, the increase of inflation rate, the increase of population and the increase of total reserves were alleged to influence the variation of Indonesia import. This research aims to analyze the factors affecting Indonesia imports. The variables used in this research are GDP growth, domestic economic shocks, inflation rate, population, and total reserves. Econometric analysis model used in this research is Error Correction Model (ECM). The results of this research reveal several outcomes: (1) the data is stationary at first difference; (2) the data is cointegrated meaning that there is a connection in long-term parameters; and (3) ECT coefficient/speed of adjustment is -0.6881 and significant is at ? = 5% meaning that the model used is valid. The conclusions of this research are: (1) In the short term, domestic economic shocks, inflation rate, population, and total reserves have a significant effect on the Indonesia import; (2) In the long term, inflation rate, population, and total reserves have a significant effect on Indonesia import.

Highlights

  • Import becomes one of the components to calculate economic growth

  • The approach used in the research is the Error Correction Model / ECM which is selected since the data is stationary at first difference level and shows the balance in the long term/cointegrated

  • The effect of population growth on the proportion of Indonesia imports can be evidenced by the value of t-statistic 1.872063 > t-table 1.701. These results indicate that population growth has a positive and significant impact to the proportion of imports to Indonesia's GDP

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Summary

Introduction

Import becomes one of the components to calculate economic growth. As identified by GDP with expenditure as basic calculation, higher value of import leads to lower economic growth. Dunn and Mutti (2004) pointed out that international trade (both import and export activities) is the consequences of accessibility openness in domestic economy. Their motives are to gain maximum profit. The interaction of supply and demand in domestic and foreign market will create new price. In these conditions, there are some countries that can influence and set a standard price

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