Abstract
Indonesia and Japan have had a long relationship either in trade or other historical
memories. As one of the Association of Southeast Asian Nations (ASEAN) member
countries, Indonesia has a tight related trade connection with Japan especially
after the agreement between Japan and ASEAN countries in 2000. Indonesian
and Japan trade covered not only in agriculture and manufactured products
but also in services. The present study uses intra-industry trade analysis
to investigate manufactured and agricultural trade between Indonesia and
Japan.
Intra-industry trade (IIT) analysis has become the emerging tools to analyse
the extent of international trade in the presence of differentiated products
under the role of economies of scale. Some studies had been devoted to investigate
the IIT patterns encompassing countries with the different level of development.
Mostly, studies on IIT were directed to trade among developed countries,
even few of them were conducted between developed and developing countries.
The study analyses the IIT patterns of Indonesian trade with Japan and explore
its determinants. As one of the biggest importers of Indonesian products,
it is expected that Japan consequently has a big influence on the emerging
IIT. The Asian financial crisis, as one of determinants, came to halt the
extent of intra-industry between Indonesia and Japan. As a kind of setting
up reduction in trade barriers, agreements such as under Asia Pacific Economic
Cooperation presented a positive effect on bilateral intra-industry trade
between two countries. Regarding the trade policies imposed in the bilateral
and multilateral relations gave significant benefits to encourage the intra-industry
trade. At the end of study, it is expected to explain the position of issued
bilateral trade policies between Indonesia and Japan in encouraging bilateral
intra-industry trade.
21st Century COE Program
-Aiming for COE of Integrated Area Studies-