Examining the Determinants, Efficiency, and Potential Export of Indonesia’s Plantation Commodities to G-20 Countries

Document Type : Research Paper

Authors

1 Research Centre for Economics of Industry, Services, and Trade, National Research and Innovation Agency (BRIN), Jakarta, Indonesia.

2 Department of Agribusiness, Faculty of Economics and Management, IPB University, Bogor, Indonesia

3 Research Center for Behavioral and Circular Economics, National Research and Innovation Agency (BRIN), Jakarta, Indonesia.

4 Department of Agribusiness, Faculty of Agriculture, Universitas Muhammadiyah Sumatera Utara, Medan, Indonesia.

5 Department of Agribusiness, Faculty of Agriculture, Universitas Sumatera Utara, Medan, Indonesia.

6 f. Department of Agribusiness. Faculty of Agriculture, Universitas Syiah Kuala, Banda Aceh, Indonesia.

10.22059/ier.2025.357163.1007680

Abstract

Consisting of 70.50% of the world's GDP and 58.37% of the world's population, countries participating in the G-20 have the potential to be a very profitable export market for Indonesia’s plantation commodities. However, the value of Indonesia's plantation commodity exports to countries in the G-20 tends to fluctuate and has even declined during certain periods. So, this paper aims to analyze the determinants, efficiency, and potential of Indonesia's plantation commodity exports to G-20 countries for the 2005-2020 period. The Stochastic Frontier Gravity Model (SFGM) and Random Effect (RE) models are estimated simultaneously to ensure the robustness of the results. Model estimates show that the GDP of exporters, GDP of importers, GDP per capita of importers, and population of importers have a positive effect on the flow of trade in Indonesian plantation commodities to countries in the G-20. Conversely, trade costs have a negative impact on Indonesia's plantation commodity exports. Another finding is that Indonesia's plantation commodity exports to countries in the G-20 have not been efficient with an average efficiency value of 52.45%. The implication is that there are still untapped opportunities to increase exports. Based on the calculation of export potential, the trading partner countries with the largest export potential are the United States (US$ 1,020.586 million), China (US$ 462.557 million), Japan (US$ 219.557 million), and Brazil (US$ 111.339 million). Based on the results, efforts to maximize Indonesia's plantation commodity export potential should be focused on countries with large economies and populations, and low trade costs.
 

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Main Subjects

References

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Iranian Economic Review
Volume 29, Issue 2
June 2025
Pages 475-498

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