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Changing Specialization and Trade Performance of Indonesia and Malaysia toward the OIC Countries
Saykha Sabila Araz, Dyah Titis Kusuma Wardani*

Department of Development Economics, Faculty of Economics and Business, Universitas Muhammadiyah Yogyakarta, Jalan Brawijaya, Tamantirto, Kasihan, Bantul, Daerah Istimewa Yogyakarta, Indonesia 55183
*dyahtitis123[at]gmail.com


Abstract

Along with its development, OIC was able to contribute to the economy, especially in the flow of international trade. Indonesia and Malaysia are the main actors in increasing exports in the OIC countries but Indonesias exports in 2014-2015 in intra-OIC trade fell by 6.8%, while Malaysian exports in intra-OIC trade fell by 16.8%. This study aims to analyze the changing of specialization and competitiveness of Indonesian and Malaysian primary commodities to the OIC countries and to determine the influence of variables such as distance, GDP-s origin country, GDP-s destination country, exchange rates, openness, populations and control of corruption-s destination country of Indonesian and Malaysian export performance to the OIC. Using balanced panel data for 10 years, from 2008 to 2017. Analyzing the data using gravity model framework, results show that, there is significance in both countries. By using random effect estimation the regression results show that GDP and openness have a positive and significant in both countries, the exchange rate and distance have a negative and significant in both countries. In addition, with the RSCA index, result shows that, there has been a changing pattern of primary commodities competitiveness within a span of 10 years in Indonesia and Malaysia.

Keywords: Trade performance; Panel data; RSCA index; OIC countries

Topic: International Conference of Islamic Economic and Financial Inclusion

Link: https://ifory.id/abstract/bTFJ4NPhdant

Conference: The 3rd International Conference on Sustainability and Innovation (ICoSI 2019)

Plain Format | Corresponding Author (Saykha Sabila Araz)

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