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2017 | OriginalPaper | Buchkapitel

14. Real Exchange Rate, Trade Balance and Deindustrialization in Indonesia

verfasst von : Fithra Faisal Hastiadi, Amelia Nurunnisa

Erschienen in: Towards A Common Future

Verlag: Springer Singapore

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Abstract

This chapter raises the current issues in Indonesia that link the instability of exchange rates to the deindustrialization phenomenon. This association has not been studied directly in previous studies. This chapter finds that these problems are interrelated and cannot be separated from each other. Deindustrialization problems in Indonesia, which are explained by the decline in manufacturing exports, decline in manufacturing labour productivity, the trade balance deficit and investment displacement from the tradable sector (manufacturing), directly and indirectly affect the exchange rate. The implication of this chapter is that government should pay attention to the Indonesian manufacturing sector in solving the exchange rate problem.

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Real Effective Exchange Rate (REER) is an approach to assessing the value of the exchange rate; the country’s trade value relative to its trade partners becomes a tool of adjustment.

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Instead of utilizing all oil and gas production for domestic use, Indonesia also exports some oil and gas given the insufficient capacity of the existing domestic refineries and incompatibility with their specification.

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Titel: Real Exchange Rate, Trade Balance and Deindustrialization in Indonesia
verfasst von: Fithra Faisal Hastiadi
Amelia Nurunnisa
Verlag: Springer Singapore
Buch: Towards A Common Future
Print ISBN: 978-981-10-5591-1

Electronic ISBN: 978-981-10-5592-8

Copyright-Jahr: 2017
DOI: https://doi.org/10.1007/978-981-10-5592-8_14