Global Pandemic 2020: Indonesia’s Output Gap and Middle-Income Trap Scenario

  • Abstract This paper showed that Indonesia’s output-gap has been improving since 2007 until the global pandemic hit Indonesia in 2020. The ultimate indicator for this improvement was the constant decrease in open unemployment. Okun’s Law calculation proved that Indonesia’s actual economic growth was higher than minimum economic growth to generate jobs. This paper also confirmed the Phillips Curve phenomenon that actual inflation was higher than expected inflation.  Indonesia’s average economic growth from 2007–2019 has increased above its natural long-run economic growth level. The global pandemic decreased Indonesia’s economic growth and increased its open unemployment rate in 2020. Indonesia’s economy needs an adjustment which depends on the pandemic containment. This adjustment will be affecting Indonesia’s scenario in avoiding the Middle-Income Trap before 2040 regarding the end of the demographic bonus era. This paper attempts to estimate the impact of the global pandemic on the economy, referring to the Spanish Flu’s impact on the global trade openness and how Indonesia adjusts its economy in the short-run and navigates its economic transformation in the long-run.…
    18 Jan
    18 Jan
  • Abstract Indonesia and Australia had agreed to seal the deal for a bilateral economic agreement entitled Indonesia-Australia Comprehensive Economic Partnership Agreement (IA CEPA). After about ten years since both countries committed to having a bilateral agreement, IA CEPA had entered into force on July 5th, 2020. This paper has two aims. Firstly, assessing potential trade and long-run investment relations with the combination of RCA (Revealed Comparative Advantage) and CMSA (Constant Market Share Analysis) with ToT (Terms of Trade) and Net Export (NX) as the filter. Secondly, measuring the potential impacts from tariff rate elimination utilizing the GTAP (Global Trade Analysis Project) model. This paper finds that both countries have complementarity relations that Indonesia can gain to improve manufacturing productivity, and Australia can benefit from sunrise to sunset relations. This paper proves that CEPA matches their need to increase their economic benefits, revealed that they could share mutual benefits and sustainable economic relations.…
    12 Des
    12 Des
  • Abstract Despite many advantages of women’s higher role in literature, GoI seems to lack commitment in addressing women empowerment issues as their priority agenda. Having more empowered women in our society becomes more salient as several studies suggest that it will lead to better financial outcomes such as saving in the household. In the era of the COVID-19 pandemic, where one could lose their source of income easily due to social restriction, having a society with a higher saving level is essential. By exploiting three waves (2000, 2007, 2014) of Indonesian Family Life Survey (IFLS) data and employing Fixed-Effect panel data analysis, this study found that a limited increase in the role of a wife in the household’s financial decision-making process will lead to a higher level of saving outcome, thus provide more resilience society toward the pandemic situation.…
    26 Okt
    26 Okt
  • Abstract The main purpose of this study is to provide and to compare a detailed statistical overview of commuting patterns, spatial commuting flows, and travel-to-work behavior of workers who work and live reside within the Jakarta Metropolitan Area (JMA). The descriptive analysis is based on the results of two cross-sectional JMA Commuting Surveys, which conducted by the Indonesia Central Statistics Agency (BPS) in 2014 and 2019. By comparing the results of two surveys, we find that the commuting indicators have been decreased, except for the travel cost. The average commuting distance and the commuting time decrease by 5,16 percent and 11,6 percent, respectively. Meanwhile, the average travel cost rises by 21,6 percent. Among 169 possible origin-destination sets, a commute route from Depok to South Jakarta has been consistently become the largest commuting flows during the last five years. Respondents who live in Jakarta subregions and commute by private vehicles tend to have a lower willingness to shift to public transport than those from other cities. In terms of the use of non-privately owned vehicles, most of the commuter respondents switch from non-dedicated lane buses to the online-ride hailing services as the travel reliability of certain public transport services within the JMA has been reduced during the period of 2014-2019. Our findings also emphasize the important role of online-ride hailing services in providing better opportunities, particularly for female commuters, to access job locations.…
    29 Agu
    29 Agu
  • Abstract Transport development has been widely recognized as one of the major drivers in shaping urban forms. While recent literature has documented the urban-land use effect of transport networks between cities, little is known about the effect within cities. Using the Global Human Layer Settlement (GHSL) data provided by European Commission Joint-Project, this paper aims to find any causation between highway expansion and urban sprawl within the Jakarta Metropolitan Area, one of the most urbanized areas in the developing countries. Employing historical transport infrastructures as instruments, the result shows that areas experiencing the most improvement in highways access are converging slower than those with small improvement. This paper adds a piece of enticing evidence for urban economics literature that highway expansion may not always lead to a sprawling development of urban areas, but it can hamper its growth into a more compact urban form. Our results also confirm the existence of transport-led urban expansion in the JMA over the last three decades.…
    14 Agu
    14 Agu
  • Abstract Indonesian Government has set an ambitious target to achieve 23 percent of renewable energy share in primary energy mix as well as in term of power sector by 2025. This target is then realized by committing a plan to build 56.4 GW additional power generation until 2028 as stated in the Electricity Supply Business Plan (RUPTL) 2019–2028. However, the deployment of RE power plant seems to be threatened due to untoward pricing policy which is considerably lower than the generation cost of RE-based electricity, resulting in the increase of possibility of future RE projects become unfeasible. Using 242 RE projects documented in 2019–2018 RUPTL, this study aims to examine feasibility of future projects under BPP price and identify other factors which could possibly increase project’s viability. The scope of this study includes several technologies such as wind, solar, hydro, mini hydro, biomass, and biogas. Financial model was employed to estimate Net Present Value (NPV) of the project as feasibility indicator. Data for project’s cost structure and financial assumption is obtained by literature review, survey and focus group discussion (FGD) to RE developers. The result shows that only less than 50 percent of the samples are feasible, accounting for only 43 per cent by number of projects (103 out of 242 projects) and 42 per cent by capacity (2,452 out of 5,888 MW). Hydro power becomes RE technologies with the highest feasibility followed by biomass. Projects located in Bangka Belitung, Gorontalo, East Kalimantan, Maluku, and North Sulawesi are all feasible,…
    23 Jul
    23 Jul
  • Abstract In recent years, academic productivity as defined by number of papers published has been the preoccupation of Indonesian research policymakers. A number of policies have been introduced, the most prominent of which is assigning score to number of publications and citations through SINTA. These initiatives, however, have often ignored the complex and heavily bureaucratized Indonesian research and higher education sector. Recently, SINTA score has also perversely incentivized some researchers to illegally increase their Scopus score. This paper is a preliminary attempt at assessing policy alternatives to address the issue of low number of academic publications, asking if there are viable or even better policies than the current point system. Incorporating Indonesia’s academic demography into our analysis, we find that giving monetary rewards for every published paper is the best policy option for lower-rank academics to “push” them into research. On the other hand, point rewards are most effective for upper-rank academics since they only need to be “nudged” into research activities. We also offer several recommendations about other policy alternatives (reforming research grants regime, providing international scholarships, and research collaboration) and the importance of detection and monitoring system to prevent the alternatives from becoming perverse incentives.…
    22 Jun
    22 Jun
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