Strategy for Increasing Exports Through ICT Development and Potential Market Mapping: Case Study of Indonesia Labor Intensive Industries
Akbar Pratama Kartika, Prof. Rossanto Dwi Handoyo, Dr. Unggul Heriqbaldi

Universitas Muhammadiyah Surakarta, Airlangga University

Abstract

The presence of ICT as a modern communication system has a vital role in all human life, especially in the business aspect. Several studies have proven that ICT has an essential role as a solution to geographic distance which is often considered an obstacle in the international trade process. Based on this phenomenon, this research aims to specifically identify the role of ICT in the export performance of Indonesian labor-intensive industries. The analysis was carried out by developing a gravity model and estimated using the Pseudo Poisson Maximum-Likelihood (PPML) and Generalized Method of Moment (GMM) methods as robustness tests. The estimation results show that ICT, both from the quantity aspect and the quality aspect, has a positive and significant impact on the volume of Indonesian exports. The results of this estimation have been proven to be consistent through several tests by controlling the problems of endogeneity, simultaneity, and auto-correlation. As a further analysis and export development strategy, this study calculates the potential partner ratio which can be used as a reference for the main export destinations for Indonesian labor-intensive industries.

Keywords: International Trade, Furniture Industry, Textile Industry, ICT, Potential Trade, PPML, GMM

Topic: International economics (colloquium)