Export-Import of Manufacturing Industry and Economic Growth In Indonesia: Approach to Causality and Cointegration Analysis

ABSTRACT: The development of the 4.0 industrial era characterized by improved connectivity and interaction based on information and communication technologies, increasingly opening opportunities for Indonesia in enhancing the competitiveness of the manufacturing industry to encourage Indonesia’s productivity and economy. The objective of this study analyzes causality and relationships equilibrium in the short-term and long-term between manufacturing exports, manufacturing imports, the rupiah exchange rate against the US dollar, and economic growth in Indonesia over 50 Years (1969 – 2018). The results show that manufacturing exports and economic growth in Indonesia have a two-way causality. Meanwhile, manufacturing imports and economic growth in Indonesia have only a one-way causality relationship. From the results of the cointegration test, it turns out that during the research period, there was no long-term balance relationship between manufacturing exports and imports and Indonesia’s economic growth.
KEYWORDS: Export-Import of Manufacturing Industries, Economic Growth