Domestic Inputs Research Articles

How U.S. tariffs impact China’s domestic sourcing: Evidence from firm-to-firm transactions

This paper investigates how tariff shocks influence the domestic performance of Chinese firms, leveraging quarterly data on both international and domestic transactions from 2017 to 2018. Our analysis uncovers several key findings: (i) a one percent increase in export tariffs leads to a 0.235 percent increase in sales to domestic buyers, suggesting that higher export costs drive suppliers to prioritize domestic markets, primarily affecting the extensive margin; (ii) a similar increase in countervailing import tariffs results in a 0.995 percent decrease in domestic purchases, underscoring a complementary relationship between China’s imported intermediates and domestic products; (iii) larger firms exhibit smaller magnitudes of domestic sales and are more likely to reduce their domestic intermediate inputs in response to a negative external risk. These findings highlight that understanding the complementary relationship between imports and domestic inputs is crucial for developing strategies to mitigate the adverse effects of tariff policies on domestic production.

On the positive economic impacts of port infrastructure development and seaborne trade efficiencies in Sub-Saharan Africa: the case of Senegal

AbstractInefficient port infrastructures is one of the challenges facing Sub-Saharan Africa, particularly as regards the West African region’s economic progress. Using a dynamic computable general equilibrium model, the paper examines how improving port infrastructure in Senegal can increase the potential of seaborne trade, and accelerate economic and social development in the country and the wider region. Despite Senegal's strategic location along the Trans-Saharan trade route in West Africa, infrastructural limitations pose challenges to port capacity. Our findings suggest that improving port infrastructure can increase port productivity, leading to a reduction in costs of imported food products and domestic inputs. As a result, the country's competitiveness in international markets would be enhanced and could stimulate the production of cash crops, industrial food, and chemical products. This would lead to increased food supply and improved purchasing power, supporting the country's food security. Results show that increased efficiencies in maritime exports and imports lead to an overall increase in economic activity, resulting in significant GDP growth, improved welfare, and a reduction in poverty incidence. This growth can be attributed to higher exports and greater availability of imported intermediate inputs at lower prices, making exports more competitive in the global market as export prices decrease.

Rapid credit expansion and firm behavior: A case study from Türkiye

This study examines the impact of a sudden and remarkable credit expansion experienced in Türkiye during the first half of 2022 on firm behavior by utilizing a novel dataset containing the universe of all incorporated firms in Türkiye. The results of the combination of coarsened exact matching and difference-in-differences methodology show that, amid the credit expansion coupled with the deterioration in expectations of inflation and depreciation in local currency, the firms with higher credit usage tended to engage in alternative channels rather than undertaking real economic activities in short term, such as pulling-forward imports and input demand and taking position against local currency to gain financial profit more than those with less credit usage during the first half of 2022. While SMEs with higher credit usage increased their imports, domestic input purchases, foreign currency purchases, and foreign currency-denominated debt settlement before maturity, large firms increased their foreign currency purchases relative to their counterparts with less credit usage.

Supply Shocks in Global Value Chains and Export Performance: Evidence from Bangladesh Using Triple Difference-in-Differences

In this paper, we evaluate how supply shocks in global value chains, such as the lockdown in China during the coronavirus pandemic, affected firm-product-level export performance in Bangladesh, which is a least-developed country where domestic inputs are inadequate due to capacity constraints. Transaction-level customs data on the universe of Bangladeshi apparel manufacturing firms are used in the analysis. We apply a triple difference-in-differences approach to compare the woven apparel exports of the firms that relied on China for inputs before and after the lockdown with those of knit apparel and firms that depended on the rest of the world as a comparison group. The results show that firms exposed to the Chinese input supply shock experienced a 36.5% decline in woven apparel exports after the lockdown. A plausible explanation for the decline in exports is the reduced shipment size driven by the constrained production capacity due to the shortage of inputs from China. We also find that exposed firms whose exports were highly concentrated in the European Union and the United States incurred an additional 18% decline compared to other firms.

Material flow and domestic demand analysis for nickel in South Korea

Nickel is used as a raw material in the production of stainless steel and secondary batteries in South Korea due to its low corrosivity and high energy density. An unstable nickel supply can negatively affect Korea's industrial competitiveness. Therefore, to identify changes in the local nickel industry and compare and analyze nickel resource circulation and recycling rates, we conducted a material flow analysis of nickel in Korea for 2018 and 2021. An integrated material flow analysis methodology was used to construct the material flow using bottom-up and top-down methods. The results showed that the domestic demand for products connected to lithium-ion batteries increased compared to the demand in 2018, as did the demand for renewable energy and renewable energy-related items, such as electric vehicles, e-bikes, and lithium-ion batteries. However, the flow of stainless steel-related products has declined since 2018 because of the declining supply and demand for automotive semiconductors owing to the COVID-19 pandemic, and the paradigm shift from internal combustion to electric vehicles. As of 2021, the resource circulation rate and recycling rate of domestic nickel resources were 22.1% and 94.73%, respectively, an increase of 5.64% and a decrease of 19.3%, respectively, compared to 2018. The main reason for the increase in the recycling rate was that the recycled amount of end-of-life nickel products in 2021 increased compared to 2018. The main reason for the increase in the resource circulation rate was that the domestic input of lithium-ion batteries increased rapidly by 2021, but they are still in use because of the life span of lithium-ion batteries. The results of this study provide a theoretical basis for industries and policymakers to develop strategies for securing nickel.

FOREIGN DIRECT INVESTMENT: GLOBAL AND LOCAL FLOWS (THE CASE OF THE REPUBLIC OF NORTH MACEDONIA)

Foreign direct investment (FDI) is the notion that can be summarized in the form in which it represents the process in which an enterprise from one country invests capital in an existing enterprise or in a new enterprise established in another country. The standard definition of foreign direct investment is given by the Organization for Economic Cooperation and Development (OECD), according to which FDI is defined as the establishment of a lasting interest in and significant degree of influence over the operations of an enterprise in one economy by an investor in another economy. FDI has proven to have an expressed importance mainly in allowing the transfer of technology – especially in the form of new types of capital inputs – that cannot be achieved or at least in the form and volume required through financial investment or trade in goods and services. FDI has already proven that it can boost competition in the domestic input market, but also motivates the employment of domestic labor. In recent decades, the global map of inflow and outflow FDI has changed considerably. Traditionally, FDI originated from developed economies, which have recently gained significant ground in the share of FDI flows between geopolitically aligned economies. In particular during financial crises there is substantial evidence that FDI can lead many developing countries to consider it as an inflow of selected private capital and in certain cases even as a single capital inflow. Such a thing finds support in the tendency of economists who insist on the free flow of capital across national borders because it enables capital to have more favorable preconditions for return at the highest rate. However, the tradition has recently been changing, making the largest sector for FDI projects to be closely related to software and IT services. Investors see rising commodity prices, increased geopolitical unrest and political instability, as well as high inflation in an emerging market as the most likely risks at this time. The official data provided by World Bank (WB), International Monetary Fund (IMF), OECD, as well as the local National Bank and State Statistical Office are unanimous that in the last 20 years, North Macedonia has maintained a continuous increase in FDI, but unfortunately, at a comparative level with the countries of the region, it continues to lags behind. The North Macedonian authorities are progressing towards the Precautionary and Liquidity Line (PLL) objectives, including preserving public finances, reducing energy subsidies, tackling high inflation and ensuring financial stability, which will also increase the possibility real for FDI inflows.

The Linkages of the Manufacturing Sector with Other Sectors of Nigerian Economy

This paper examines the linkage between the manufacturing sector and other sectors of the Nigerian economy using Rasmussen method with the help of the Leontief inverse matrix. The National Bureau of Statistics (NBS) and the CBN Statistical Bulletin for 2011 provided the input-output transaction table of all sectors, which served as the source of data for the study. The constructed input-output (I-O) table gives a simple and logical arrangement of all economic activity within an economy. The result of this study shows that the manufacturing sector has a strong forward and backward linkage with other sectors of the Nigerian economy.The findings suggest that the Nigerian government should prioritize policies that promote growth in the manufacturing sector, as it will improve better living standard for all individuals in the sector and all others connected to the manufacturing sector. This can be done by providing tax breaks and other incentives to manufacturing firms, and by investing in infrastructure and education. The government should also focus on developing policies that promote the development of industries that produce intermediate goods and services, as these industries are important for the growth of the manufacturing sector as a whole also the manufacturing enterprises should be encouraged to employ domestic inputs.

Comparison of plastic pollution between waters and sediments in four Po River tributaries (Northern Italy)

The monitoring of plastic contamination in freshwaters is still pioneering in comparison with marine environments, and few studies analyzed the distribution of these pollutants in both aqueous and bottom compartments of continental waters. Therefore, the aim of this study was the comparison of plastic pollution in both waters and sediments of four Po River tributaries (Ticino, Adda, Oglio and Mincio Rivers), which outflow from the main Italian sub-alpine Lakes, in order to establish the strengths and weaknesses of both matrices. The main results pointed out a heterogeneous plastic contamination, with the lowest values in Ticino (0.9 ± 0.5 plastics/m3 in waters and 6.8 ± 4.5 plastics/kg dry weight - d.w. - in sediments) and the highest in Mincio (62.9 ± 53.9 plastics/m3 in waters and 26.5 ± 13.3 plastics/kg d.w in sediments), highlighting a plastic amount in sediments four times higher than waters. Plastic pollution, mainly due to microplastics, was associated principally to a domestic input in both waters and sediments of Ticino and Adda Rivers, as well as in sediments of Oglio, while an industrial pollution was found in waters and sediments of Mincio and Oglio waters. Our data clearly highlighted as the monitoring of both matrices provide complementary information for a holistic risk assessment of these emerging contaminants in freshwaters: the aqueous matrix provides an instantaneous picture of contamination, while sediments the history of pollution.

Revisiting the Role of Imported Inputs in Asian Economies

Purpose - Global production chains and their impacts on economic growth have drawn extensive attention from researchers. Close relationships among global production chains, export and economic growth have been illuminated, as evidenced by the fast and stable economic growth of East Asian economies. These economies perform various roles within global production chains using offshoring, in which the impact of import on domestic gross output is as strong as that of export. The impact of import on economic growth would depend on whether imported inputs substitute or complement domestic inputs production, which is likely to vary according to individual countries' functions within global production chains. The economic growth of concerned countries would also be diverse. However, little attention has been paid to the impact brought by imports compared to its significance.
 Design/methodology - The principal methodology used in this paper is structural decomposition analysis (SDA), widely chosen to elucidate the impact of various factors on domestic gross output using input-output tables. This paper extracts trade data of six Asian economies from the World Input-Output Database (WIOD) 2016 release that covers 43 countries for the period 2000-2014. The extracted data is then categorised into 37 sectors. First, this paper calculates the Feenstra-Hanson Offshoring Index (OSI) of each country. It then applies SDA to measure the changes in each economy's gross output, export, import input coefficients, and domestic input coefficients. Finally, after taking the first difference from pooled time-series data, it estimates the correlations between imported input coefficients and OSI using the ordinary least square (OLS) method.
 Findings - The main findings of this paper can be summarised as follows. Firstly, all six countries have increasingly engaged in global production chains, as evidenced by the growing size of OSI. Secondly, there are negative correlations in five countries except Japan, with sectoral differences. Thirdly, changes in import input coefficients are not negative in all six countries, indicating that offshoring does not necessarily substitute for domestic inputs production but does complement it and, therefore, fosters their economic growth. This is observed in China, Indonesia, Korea and Taiwan. Offshoring has led to an increase in the use of imported inputs, which has, in turn, stimulated domestic inputs production in these countries.
 Originality/value - While existing studies focus on the role of export in evaluating the impact of participating global production chains, this paper explicitly examines the unexplored impact of import on domestic gross output by considering both the substitution and the complementary effect, using the WIOD. The findings of this paper suggest that Asian economies have achieved fast and stable economic growth not only through successful export management but also through effective import management within global production chains. This paper recommends that the Korean government and enterprises carefully choose offshoring strategies to minimise disruption to domestic production chains or foster them.

Does financial liberalization matter for domestic value added in exports? Evidence from China

ABSTRACT Upstream stages of production chains are often capital intensive, so financial liberalization which improves the availability of financial resources may expand the supply of domestic inputs and then raise domestic value added in exports of downstream firms. After China’s accession to the WTO, China’s government removed the restrictions on foreign banks’ business and allowed foreign banks in China to offer Chinese currency (RMB) services to Chinese firms. We utilize this policy change to test the effects of financial liberalization on Chinese firms’ domestic value added in exports. We have three main findings: (1) domestic value added in Chinese firms’ exports is positively associated with the removal, (2) the removal of foreign bank business restrictions leads to a general change of local financial markets, which facilitates firms’ financing activities and (3) the improvement in domestic value added following the removal is not mainly driven by export mode switching from processing trade to ordinary trade but by the increase in domestic inputs.

An extension of the hypothetical extraction method: endogenous consumption and the armington treatment of imports

The hypothetical extraction method (HEM) is the tool of choice for identifying underlying economic interdependencies. It provides critical information to policymakers regarding the strategic role of different sectors. However, the standard implementation of the HEM does not include the impact that falls on the price structure as a result of the substitution between domestic and imported products that takes place after the extraction of a sector or industry, in this case. We propose to overcome this limitation by extending the HEM using an Armington-Leontief model with endogenous consumption. Unlike the perfect substitution assumption typical of the standard HEM, the Armington assumption with endogenous consumption implies that the shift from domestic inputs to imports affects the cost functions. Therefore, both quantities and prices become endogenous in the ‘post-extraction' equilibrium. We also argue that HEM indicators should be expanded beyond the typical output-related indicators, i.e. value-added, employment, or pollutant levels, so that summary indices of the type more commonly used in economics, such as welfare indicators, are used. We implement this novel approach using the latest input–output data for Spain in 2016.

Impact of imports from China on Indian manufacturing performance: an analysis of trade competitiveness

PurposeThe focus of this paper is to provide an assessment of the impact of imports from China on Indian manufacturing and capture the multifarious dimensions of India–China bilateral trade flows. By examining the comparative disadvantage imports (RCA<1), the paper critically examines their significance on India's industry output and performance and underlines factors beyond trade competitiveness.Design/methodology/approachFor examining the impact of India's manufacturing imports from China on industry performance, four stages of analysis is adopted. First, the imports with RCA <1 have been identified. For these, BRCA was also computed. Second, trends in industry performance associated with high imports from China. Third, for estimating the impact of imports on industry output, augmented production function was specified and estimated with imports from China as a potential determinant. And fourth, comparison of industry performance between India and China.FindingsThe impact of imports from China on industry output is positive and significant. A 1% increase/decrease in the share of China in world imports will result in output increasing by 0.31%. The rise in imports from China seems to be on account of non-availability of necessary intermediate and capital goods domestically, thereby making these imports critical and complementary for production. This negates the threat perception of imports from China.Research limitations/implicationsThe paper recognizes the need for understanding the firm heterogeneity in import decisions and R&D intensity of imports. Across industries, the drivers for firms' decisions to import are “learning by importing’ and “self-selection” (Camino-Magro et al., 2020). Also, another important dimension at the firm-level analysis is the elasticity of substitution between foreign and domestic inputs. If the elasticity of substitution is low then high import barriers will lead to reduction of domestic output. These firm-level issues are important for effective policy interventions.Practical implicationsOne, the inward looking focus of the industry which is exhibited in low export intensity will not provide the necessary impetus to propel the manufacturing sector to a higher technology frontier and translate the productivity gains to export competitiveness. Two, unless the domestic manufacturing is propelled from the current low/medium technology to high technology products, the current policy thrust on “self-reliance” cannot be realized.Originality/valueAnalysis is based on manufacturing imports with RCA<1 from China thereby underlining factors beyond trade competitiveness not covered by RCA methodology. Complementing the quantitative analysis with economic policy developments in China and India and contrasting the same has provided insights into the real factors determining India–China bilateral trade.

Two‐sided heterogeneity: New implications for input trade

AbstractThis article develops a heterogeneous firm model to analyze selection effects at different production stages on trade‐induced intra‐industry resource reallocations. Using a two‐country symmetric setting in which both inputs and final goods are costly to trade subject to selection, we show that the trade elasticity of intermediate goods is endogenously greater than that of final goods due to an extra adjustment in the extensive margin. We also show that the welfare gains from input trade liberalization are greater than those from output trade liberalization if and only if the domestic input share is smaller than the domestic output share.

Occurrence, characteristics, and removal of microplastics in wastewater treatment plants located on the Moroccan Atlantic: The case of Agadir metropolis

Wastewater treatment plants (WWTPs) are some of the main sources of microplastics (MPs) in the environment. However, studies on the occurrence and removal efficiency of MPs in WWTPs are still scarce, especially in African countries. Thus, the aim of this work was to study the abundance of MPs in the influent and effluent of two WWTPs (Aourir and M'zar) from the Agadir metropolis (Moroccan Atlantic). The two WWTPs receive different wastewater inputs (domestic and industrial). In addition, the impacts of seasonality on the fate and removal efficiency were investigated. The results showed that the MPs abundance in the wastewater decreased from 188 MPs/L in the influent to 50 MPs/L in the effluent for Aourir WWTP (domestic inputs); while the abundance was greater in the M'zar WWTP (urban and industrial inputs) recording a mean value of 519 MPs/L and 86 MPs/L in the influent and effluent, respectively. MPs collected in the Aourir WWTP ranged from 290 to 3200 μm, while MPs from the M'zar WWTP, ranged from 330 to 4200 μm. Overall, the size range of 100–500 μm was the most abundant for both WWTPs. Fibers were the highest MPs morphotype found, followed by fragments. MP colors were mainly red, black, blue, and transparent for both treatment plants. Additionally, FTIR spectroscopy showed the presence of eight different polymers, mainly polyethylene (PE), polypropylene (PP), and polystyrene (PS). Seasonal variation analysis showed that MPs abundance in summer was significantly higher compared to other seasons. However, the comparison of the removal efficiency (RE) between the different seasons indicated that the winter season (74 %) recorded the highest RE for Aourir WWTP. Conversely, spring (87 %) recorded the highest RE for M'zar WWTP. SEM/EDX micrographs showed different degrees of weathering and chemical elements adhering to the surface of the MPs. The findings of the current study will serve as a baseline for future considerations about management strategies, wastewater reuse, as well as the understanding of the occurrence of microplastic pollution along the marine ecosystems of Morocco.

Building back better tourism sector post-COVID-19 pandemic in Indonesia: input-output and simulation analysis

ABSTRACT This study, by employing an input-output and simulation analysis, aims to examine policies to build back better the tourism sector's post-COVID-19 pandemic by taking Indonesia as a case study. The result confirms that to build back a better tourism sector in the post-COVID-19 pandemic, the government of Indonesia needs to maintain the supply of domestic inputs used as the primary source of intermediate inputs in the tourism sector and other sectors related to the tourism sector. The simulation analysis indicated that the worst effect of the COVID-19 pandemic on the tourism industry occurred in output reduction compared with the value-added and labor income losses. However, the government needs close collaboration with the private sector and other wide-range tourism stakeholders in determining tourism policies post-COVID-19 pandemic, apart from the importance of evidence-based policy research. This study contributes to international comparative policy research in the tourism field post-COVID-19 pandemic.

Analysis of Substance Flow and the Transition of Industrial Structure of Indium in Japan

Indium is a rare metal that is an essential raw material for indium tin oxide (ITO) essential for transparent electrodes for displays. However, its supply is unstable as it is a by-product of zinc. In this research, we investigated the domestic substance flow of indium used for liquid crystal applications in Japan. Accordingly, we quantitatively evaluated the amount of indium contained in the process loss and the content of indium in end-of-life products. Through this quantification, we examined the visualization of loss in the entire flow and the usability of end-of-life products as secondary production. Consequently, it was found that the amount of indium used in the production of end-use-products in Japan has increased significantly due to the growth of liquid crystal display TVs, particularly in preparation for the transition to terrestrial digital broadcasting in 2011, and has drastically decreased after 2012. Meanwhile, some manufacturing bases have been relocated from Japan to other countries, and a certain proportion of end-use-products are imported, by which we infer the domestic input amount of end-use-products in recent years is estimated to have remained at approximately 4 t. Based on the result, after having continued to increase to the maximum value of approximately 70 t in 2014, the in-use stock has exhibited a gradually decreasing trend. Moreover, the indium content in end-of-life products has continued to increase, and in 2015, it exceeded the amount of the end-use-products input into society. Furthermore, compared with the process loss at the time of processing from ITO to a display, the gap has been narrowed from 100 times or more, and the indium content in end-of-life products in 2008 to about 15 times in 2017. These results suggest that the recycling potential of end-of-life products has increased with the spread of indium-based products.

Spatio-temporal monitoring of potentially toxic elements in Lagos harbour water and its health risk implications

Continuous discharge of industrial and domestic inputs from various processes into the Lagos lagoon has significantly affected the quality of the aquatic environment, as a result of potentially toxic elements (PTEs) being released into the harbour during anthropogenic activities. This study involved monitoring the concentration and distribution of heavy metals in Lagos harbour during the dry and wet seasons. The PTEs can pose a serious ecological threat to the marine environment as well as human beings when the level of priority metals like cadmium, lead, and chromium is beyond World Health Organization (WHO) limits of 0.003, 0.05, and 0.1 mg/L, respectively. The shipping activities within the harbour play a significant role in the generation of these toxic metals. The diverse nature of these metals coexisting with their oxidation states in aquatic environments and their bioaccumulation influences the toxicity of PTEs towards the living organism. The quantification of these metals with highly selective and accurate instrumentation is imperative. Ion-selective exchangers and other functionalized composite nanomaterial are critical for harbour water remediation because of the high risk that could be associated with prolonged exposure to these toxic elements especially when the carcinogenic risk value is greater than 1 × 10−6 mg/kg/day.

Trade Integration and Production Disintegration of Manufacturing Industries: India in Global Platform

The bulk of the world trade in commodities now a days consist of intermediate goods, which play an essential role in production and creation of value-added. As a consequence, the global production process is getting much more integrated today than ever before. To understand and examine this internationalisation in Indian manufacturing industries, using World Input–Output Database (WIOD), we have estimated the foreign and domestic value-added contents in export and output of Indian manufacturing for the period 2000 to 2014. Further, to complement this analysis, we have also performed regression estimations to identify the relationship between export, imported inputs use, and output growth of Indian manufacturing industries. Our study reveals low usage of domestic inputs use and more usage of imported inputs. These indicate stronger backward linkages in production and weak forward linkages in global consumption and production networks. Regression analysis also strengthens the finding of higher backward participation of the manufacturing sector. We have employed panel vector error correction model, fully modified ordinary least square and dynamic OLS models. Our results reveal a robust long-run causality between imported inputs usage and export-growth of the sector. JEL Codes: C33, C67, F14, F15

Agglomeration, resource reallocation and domestic value‐added ratio in exports

AbstractUsing micro merged data of China's customs transaction and National Bureau of Statistics Annual Surveys of Industrial Firms data, this paper analyzes the effect of industrial agglomeration on domestic value‐added in exports to gross exports (DVAR). It is found that industrial agglomeration significantly improves DVAR. Mechanism tests show that industrial agglomeration promotes DVAR by increasing the relative price of imported intermediate inputs and domestic inputs (relative price effect), as well as restrains DVAR by restraining cost markup of firm (cost markup effect). However, the promotion effect of the “relative price effect” is greater than the restraint effect of the “cost markup effect”. In addition, accession to the World Trade Organization and exchange reform strengthen the promotion effect of industrial agglomeration. The result of dynamic decomposition shows that 74.62% of the industry's DVAR increase is attributed to the resource re‐allocation effect, which is an important channel for industrial agglomeration to promote DVAR.

Analysis of Competitiveness and Impact of Government Policies in the Business of Laying Chicken in Sindang Kasih Village West Ranomeeto Sub District South Konawe District Using the Policy Analysis Matrix Approach

This study aims to assess the competitiveness of the laying hens business in Sindang Kasih Village, East Ranomeeto District, South Konawe Regency, as well as the influence of government policies on the laying hens' company. In March 2021, the study was conducted in Sindang Kasih Village, East Ranomeeto District, South Konawe Regency. All of the participants in the study were laying hen breeders. The research sample is five businesses. The type of research data is quantitative, namely information in the form of numbers. Research variables include foreign and domestic input costs, private prices, social prices, production and revenue. Data analysis uses the Policy Analysis Matrix approach. The findings revealed that the laying hens business in Sindang Kasih Village, East Ranomeeto District, South Konawe Regency, had a competitive advantage, based on indicators of competitive advantage such as the Private Cost Ratio (PCR) value of 0.31 and indicators of comparative advantage such as the Domestic Resource Cost Ratio (DRCR) value of 0.25. The influence of government policy on laying hen output in Sindang Kasih Village, East Ranomeeto District, South Konawe Regency, leads the output value at social prices to be higher than the output value at private prices. Meanwhile, the influence of government policy on laying hen inputs leads profits to be higher at private pricing due to input import obstacles, resulting in production using comparatively cheap local inputs. Based on the conclusions of the study, it is necessary to have a government policy regarding increasing the selling price of laying hens products at the farmer level and supporting export activities by increasing the production of laying hens because the research results show that the price of laying hens in the international market is relatively high compared to the prevailing prices at the farmer level. And the production capacity of laying hens has been unable to export or meet international market demand.