THE EFFECT OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) ON INDONESIAN BILATERAL TRADE: EVIDENCE FROM ASEAN COUNTRIES
Date
2019-12-30Author
Wardani, Dyah Titis Kusuma
Azizurrohman, Muhammad
Tanthowy, Aliza Harry
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The advancement of electronics-based Information and Communication Technology (ICT) that develop people to become more modern society, has been linked to trade that is to reduce fixed costs include the searching cost of the market, advertising, and establishing network distribution. Furthermore, the use of ICT reduces delays in information transmission, to make trade planning more efficient and accurate. This study aims to analyze the impacts of ICT Development on bilateral trade between Indonesia and its trading partners in the ASEAN countries. Using an extended panel gravity model framework and panel data models for the period 2010–2017, employing a pooled OLS. Then, this research is proceed with Chow Test to determine which model is better between OLS and fixed effect. In addition, Lagrange Multiplier test is also performed to compare which model is better between pooled OLS and random effect. The sample includes 9 ASEAN member countries as Indonesia trading partners. Results indicate that ICT Development has positive and significant impacts on Indonesian export volume toward ASEAN countries. Other variables such as RGDP’s ASEAN countries (as Indonesian trading partners), distance, population and real exchange rate also has positive and significant effect on Indonesian export. In addition, these results are robust to alternative model specifications and estimation methods. Based on these results, some policy implications can be derived. For instance, Indonesia may develop strategic trading partnerships with countries that have large economic size and have achieved high levels of ICT development, in order to increase its overall trade.