Lina Asmara Wati, Jihyun Eum
Purpose: This paper aims to empirically examine the Linder hypothesis on Indonesian manufacturing intra-industrial trade values from six Asian trading partner countries. Design/methodology/approach: The study focuses on importing Indonesian manufactured intra-industry goods from six Asian countries between 2010 and 2022. We use a regression model with panel data analysis comprising 288 observations for the export value model and 283 observations for the import value model. Findings: The regression results show that the Linder variable, GDP deflator, and ASEAN membership significantly influence the value of Indonesia's exports and imports, with differences in per capita income and inflation in partner countries contributing to the decline in export value. In addition, membership in ASEAN provides important trade benefits, while similar economic structures and high inflation in partner countries also contribute to the decline in Indonesia's imports. These findings are supported by panel data analysis using the Random Effects Model Regression with AR(1). Research limitations/implications: We suggest that the Indonesian government implement policies that support the development of the domestic industrial sector, maintain price stability, and utilize ASEAN membership to increase export competitiveness and reduce dependence on imports. Originality/value: This research guides other developing countries that face similar challenges in increasing the value of their exports. © The Author(s).
Socio-Economic Fisheries and Marine Department, Universitas Brawijaya, Indonesia; International Business and Trade Department, Kangwon National University, South Korea
