ANALISIS AGLOMERASI INDUSTRI MANUFAKTUR DAN TRADE FLOWS INDONESIA

Abstract

Market openness has facilitated the flow of products from one country to another so that it has encouraged developing countries in particular to increase the competitiveness and added value of their products. Increasing product competitiveness is inseparable from meeting international quality standards for goods and product innovation by the industry concerned. However, Indonesia, with its large number of industrial centers, has not optimally participated in the global value chain. The purpose of this study is to identify the dynamics of manufacturing industry agglomeration, Indonesia's trade flows and Indonesia's participation in GVC. The research method used is Vector Autoregression analysis. The research data consists of national economic growth, manufacturing sector economic income, economic openness, manufacturing industry agglomeration, trade flows (manufacturer exports and imports) and the global value chain index. The results show that trade openness has a positive and significant influence and industrial agglomeration shows a positive and significant value on GVC participation. Exports and imports show a negative and significant effect on GVC participation. Thus it is necessary to expand the industry and increase manufacturing productivity followed by the implementation of appropriate government policies.