THE COMPETITIVENESS CHALLENGE IN EAST JAVA UNDER THE ASEAN ECONOMIC COMMUNITY DISRUPTIVE ERA

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.