INTERREGIONAL TRADE- PATTERN AND CHALENGES Kusuma Agung Handaka

Background Problem of central and regions relationship Decentralization to overcome the problems

Objectives Determine the Output Structure Determine the Final Demand Structure

REVIEW OF INPUT-OUTPUT ANALYSIS (Basic Concept) It can be used to predict the effect exerted by growth of demand in a particular sector on the rest of the local economy IO analysis involves construction of a square n x n matrix, which recorded all flows of sales/distribution of output (in the rows) and purchases/input composition (in the columns)

REVIEW OF INPUT-OUTPUT ANALYSIS

REGIONAL INPUT-OUTPUT ANALYSIS Macro economic indicator cannot depict the figure at regional level. Regions have their own characteristics

IO AT REGIONAL LEVEL There are three regional IO Models: Single regional Input Output Interregional Input Output (Model Isard) Multiregional Input Output (Model Chenery-Moses)

MULTI REGIONS MODEL Interconnections among regions are captured in the trade coefficient tables. Let say, the total shipments of good i into region M from all the regions is The Interregional trade coefficient is

MULTI REGIONS MODEL The multiregional IO

INTERREGIONAL TRADE (INDONESIA CASE STUDY) In this study, we will concern the inter- island case The islands are Sumatera, Java and Bali, Kalimantan, Sulawesi, Maluku, Papua, and Nusa Tenggara

REGIONAL OUTPUT STRUCTURE Based on Indonesia IO table 2005, total output in Indonesia was Intermediate input has the biggest contribution to Indonesia Output structure (about percent) The second biggest contribution give by households consumption (23.41 percent) While the lowest contribution given by stock change, which only achieves 0.42 percent

REGIONAL OUTPUT STRUCTURE 58.8 percent of that total output was produced in Java and Bali 19.3 percent was produced in Sumatera While the rest, 21.9 percent was produced in the rest islands with the smallest was in Maluku with only 0.3 percent

FINAL DEMAND In line with the gross output, the final demand shares the same characteristic in its distribution. Java and Bali island has the biggest final demand, achieved 59.4 percent. The second biggest final demand comes from Sumatera that achieve 19.8 percent. While the smallest, Maluku, has final demand 0.3 percent. It is fewer than the foreign import that achieve 5.7 percent.

INPUT COEFFICIENT As the biggest gross output island, Java and Bali island, to produce 1 rupiah output, it needs intermediate input from Java and Bali itself 0.40 rupiah. The second biggest contribution comes from foreign import, which achieved 0.06 rupiah. Sumatera island input coefficient shows that in order to produce 1 rupiah output, it needs intermediate input from Sumatera itself 0.36 rupiah. While the second biggest contribution comes from Java and Bali, 0.06 rupiah.

INPUT COEFFICIENT Kalimantan input coefficient, Sulawesi, Maluku, Papua, and Nusa Tenggara also show the same characteristic as Sumatera. The biggest intermediate input comes from their own island, while Java and Bali gives the second biggest contribution. Java and Bali island shows their domination in providing the intermediate input in the rest of the islands in indonesia.

In the regional output structure analysis, intermediate input gives the biggest contribution (40.90 percent) 58.8 of output in Indonesia was produced in Java and Bali island In line with the output characteristics, Java and Bali has the biggest final demand (59.4 percent) of total final demand in Indonesia CONCLUSIONS

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