Xuat-Khau-Ho-Tieu Theory
Xuat-Khau-Ho-Tieu Theory
Xuat-Khau-Ho-Tieu Theory
Abstract: Indonesian pepper is well known as the king of spices because its position is more important than other spices in Indonesia,
in terms of production and export. Indonesia become the second largest of pepper exporter in international market. The largest
producer and exporter of pepper is Vietnam. But, in 2015, about 39% of Indonesian pepper were exported to Vietnam whereas Vietnam
already known as the largest exporter in the world. Therefore, the main objective of this study is to determine factors that may affect the
trade flow of Indonesian pepper in the international market, in order to know the appropriate strategy to develop export of Indonesian
pepper in the international market. This study uses export demand approach to analyze the determinant of Indonesian pepper trade
flow. The objects of this study are whole pepper and ground pepper using the 6-digit classification of harmonized system (HS) code,
with code 090411 for whole pepper and 090412 for ground pepper. The result shows factors that statistically significant in affecting
export demand of Indonesian pepper are the GDP per capita of importing countries, economic distance, export price, real exchange
rate, and participation in FTA. GDP per capita of the importing countries shows positive effect to the export volume of Indonesian
pepper. Meanwhile, the economic distance, export price, real exchange rate, and participation in FTA have a negative effect to the
export volume of Indonesian pepper.
4.5 Free Trade Agreement (FTA) The recommendation for further research, it needs to analyze
the export supply of Indonesian pepper, including other
Participation in FTA impacts to the trade flow of two variables such as production of Indonesian pepper and GDP
countries. A country will get the benefit from reducing or per capita of Indonesia. The further research can also analyze
removing tariff barrier in the partner country. As the result, the trade flow using gravity model to enrich the estimation
the export cost to the partner country will be reduced. and analyze the sensitivity of Indonesian pepper supply to the
pepper world price .
Based on the estimation result, participation in FTA has a
negative and significant at 10% of the significant level to the References
export volume of Indonesian pepper. The estimated
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