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Journal of International Trade Law and Policy: The effects of Indonesia’s technical barriers to trade on manufacturing exports: an empirical analysis using the pseudo-Poisson maximum likelihood method
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Abstract
Purpose – The purpose of this study is to investigate the effects of Indonesia’s technical barriers to trade
(TBT) on manufacturing exports.
Design/methodology/approach – This study uses the UNCTAD database to calculate the coverage
ratio and frequency index of TBTs, which represent the restrictiveness of TBTs on imports. The effects of
TBTs are estimated using the gravity model (Tinbergen, 1962) and the pseudo-Poisson maximum likelihood
methodology (Santos Silva and Tenreyro, 2006, 2011).
Findings – An estimation on the manufacturing sector shows that TBT reduces Indonesia’s
manufacturing exports. However, the effect of TBT is different in disaggregated manufacturing sector.
TBT is found to reduce exports of chemicals and transportation but increase exports of metal and
textiles. This finding supports the empirical evidence that TBT can create trade-impeding and demandenhancing effects on trade flows. The negative effect of TBT on chemical and transportation exports
implies that the cost of compliance is higher than the increasing demand rate. This finding suggests the
need for policy evaluation and improvements for restrictive TBT. As Indonesia is still highly dependent
on imported inputs, restrictive TBT can potentially reduce the productivity of the Indonesian
manufacturing sector.
Originality/value – This study aims to investigate the effects of TBT in Indonesia, as a manufacturingbased economy that relies heavily on imported intermediate inputs. Furthermore, this study contributes to the
literature by using country-specific techniques and aggregated and disaggregated manufacturing sectors as
subjects for study. Meanwhile, previous studies use multi-country and multi-product approaches and focus on
the aggregate sector. This study estimates the effects of TBT on the disaggregated sector, given its high share
of imported inputs and reliance on export-oriented industries. TBT is constructed in a more detailed product
level (HS-4 digit level) to provide more accurate results.
NONE
Text
ENGLISH
EMERALD INSIGHT
2022
ENGLAND
JURNAL ILMU HUKUM
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APA Citation
Christina Ruth Elisabeth. (2022).Journal of International Trade Law and Policy:
The effects of Indonesia’s
technical barriers to trade on
manufacturing exports: an
empirical analysis using the
pseudo-Poisson maximum
likelihood method.(Electronic Thesis or Dissertation). Retrieved from https://localhost/etd