Romadhon Ardiansyah Tesis FE Naskah Ringkas 2015

8/20/2019 Romadhon Ardiansyah Tesis FE Naskah Ringkas 2015

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Efek Tarif terhadap Impor: Analisis Sektoral di Indonesia pada Tahun

2001-2012

Romadhon Ardiansyah

Program Pascasarjana Ilmu Ekonomi, Fakultas Ekonomi, Universitas Indonesia, Kampus UI Depok, a!a "arat,#$%&%, Indonesia

E-mail: [email protected]

Abstrak

Karya tulis ini menguji validitas dari pardigma yang ada di Indonesia selama ini yang menyatakan 'ah!a tari( mampu menekan impor) *ecara spesi(ik, karya tulis ini menginvestigasi e(ek tari( terhadap impor) Data yangdigunakan adalah data perdagangan sektor industri pada periode &++#&+#& yang dikelompokkan 'erdasarkan-* $digit) *elain itu, kami juga mengukur welfare cost dari peru'ahan tari( dengan menggunakan Harberger`s

approach) -asilnya menunjukkan 'ah!a tari( 'erpengaruh negati( hanya pada 'e'erapa sektor industri, sepertisektor kimia, 'ijih.kaca, dan logam, sedangkan pada sektor lainnya tidak menunjukkan e(ek terse'ut) /emuandari studi ini menunjukkan 'ah!a pada tiga sektor industri terse'ut, untuk tahun &+#& setiap penurunan tari( se'esar #0 akan meningkatkan welfare gain yang setara dengan 10 dari pendapatan tari()

The Effect of Tariffs on Import: A Sector-wise Analysis of Indonesia in

2001-2012

Abstract

/his paper e2amines the validity o( the commonly accepted paradigm that tari((s discourage imports inIndonesia) *peci(ically, this paper investigates the e((ect o( tari((s on imports 'y industry using si2digit sectoraltrade data (or the &++# and &+#& period) 3e also measure the !el(are cost o( a marginal change in tari(( rates ineach industry using -ar'erger4s approach) /he results sho! that tari(( negatively a((ect only certain industries,such as chemical, stone.glass, and metals, 'ut not others industries) /he (indings demonstrate that in these threeindustries, the !el(are gain (rom a #0 decrease in the &+#& tari(( rate amounts to appro2imately 10 o( tari(( revenue)

Keywords: Tariff, Indonesian import, Harbergers approach

Introduction

/he primary o'jective o( this paper is to empirically test the validity o( the commonly

accepted paradigm that tari((s discourage import 5uantity in Indonesia) In &+##, the 6inistry

o( Industry o( Indonesia stated that tari(( reduction increased Indonesian imports in the &++7

&+#+ period) -o!ever, to date, no e2isting research empirically e2amines this paradigm at the

sector level (or Indonesian import) In this paper, !e use panel data consisting o( 1,18& si2

digit sectors (or the &++# &+#& period) "y categori9ing these si2digit sectors into #: groups

o( sectors or industries, !e estimate the e((ect o( tari((s on imports (or each industryseparately) 3e then compute the !el(are gain o( a marginal decrease in tari(( rates (or each

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industry 'ased on -ar'erger4s approach)

/he results sho! that tari((s discourage the importing o( chemical products, stone.glass, and

metals, 'ut do not have this e((ect on the other #& industries) /he results 'ased on -ar'erger4s

approach reveal that the !el(are gain (rom decreasing tari(( rates 'y #0 is e5ual to &)780 to

1)&10 o( tari(( revenue in each o( these three industries, !ith the highest gain in the metals

industry at ;1+)$& million)

3e also conduct a structural estimation o( import demand (unctions (or the #: industries) /he

results revealed that, unlike their 5uantity, the import demand (or (oodstu((s and

machinery.electrical is negatively in(luenced 'y the tari((< and that the price elasticity o(

import demand as !ell as its crossprice elasticity against the domestic price are insigni(icant

(or #+ out o( #: industries)

*ome studies have discussed the e((ect o( tari((s on imports in di((erent parts o( the !orld)

"ertola and Faini =#88#> estimated the 'ehavior o( imports in response to the elimination o(

tari(( and nontari(( 'arriers to trade in 6orocco) /homakos =&++&> empirically analy9ed the

e((ects o( trade li'erali9ation on import demand in /urkey 'y estimating the disaggregated

import demand elasticities) Paulino =&++%> employed countrylevel panel data to estimate the

e((ect o( trade li'erali9ation on import gro!th in && developing countries, including

Indonesia) /hree o( them used imports tari((s as an indicator o( trade li'erali9ation)

Fel'ermayr, ung, and ?arch =&+#1> e2amined the e((ect o( tari(( on !el(are in the conte2t o(

6elit9 model, ho!ever, to the 'est o( our kno!ledge this paper is the (irst to provide an

empirical evidence o( the tari((s4 impacts on the sectorlevel imports as !ell as !el(are in

Indonesia)

/he remainder o( this paper is organi9ed as (ollo!s) In *ection &, !e discuss the methodology

and data) *ection 1 presents the results o( tari((4s impacts on import 5uantity) *ection %

e2plains the structural estimation o( import demand (unction) Finally, *ection : concludes the

paper)

ethodolo!y and "ata

3e (irst estimate the e((ect o( tari((s on imports 'y estimating the (ollo!ing e5uation (or each

o( #: industries@

qijn= β i0+ βi1 τ ijn+ β¿ yn+ β ij D j+εijn =#>

3here su'script i represent industry i, ! ∈ " i correspond to the !th si2digit sector, " i is the set

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o( si2digit sectors categori9ed in industry i, and n represents year n) /he varia'les are de(ined

as (ollo!s@ # is the =natural> log o( import 5uantity in tons< = ln =# t >, !here t is the tari((

rate#< and y and $ are year and sector dummies respectively&) Bote that the dummies capture

the sectorspeci(ic endogeneities that in(luence 'oth the import 5uantity and tari(( rates

simultaneously, such that our primary interest, β i1 , is consistent)

2#1 $elfare Analysis %ia &arber!er's Approach

3e then measure the marginal social !el(are cost o( a change in tari(( rate via -ar'erger4s

approach1) /his approach measures the social !el(are cost due to a marginal increase in the

tari(( amount as (ollo!s@

∂W

∂T ij=T ij (

dQij

d T ij )3here % is social !el(are, T is amount o( the tari(( and & is the import 5uantity%) Rearranging

the a'ove e5uation, !e (ind that the marginal !el(are cost o( an incremental #0 increase the

tari(( rates o( all sectors in the ith industry, denoted 'y '% i 'ecomes

∆W i=∑ j∈ ji

∂W

∂ t ij=∑

j∈ ji

βi1( t ij1+t ij) PijwQ ij

!here Pw

is the !orld price)

2#2 "ata

/his study employs annual data on Indonesian import (or 1,18& si2digit sectors (rom the

# /ari(( is de(ined as the average o( all ad valorem tari(( rates o( #+digit sectors under the

same $digit -* Code) In this study, !e get the data (rom 3/ !hich is the data is alreadythe averaged to $digit level)

& /he e2pression (or the yeardummy term is simpli(ied 'y noting that∑ň

β iň y ň= β¿ yn as

yň + (or ()n ) /he same applies to the sector dummy D)

1 -ar'ergers approach !as developed 'y -ar'erger =#8$%> to measure the e((ect o( marginal policy change on social !el(are) Feldstein =#888> and Chetty =&++8> applied this approach tomeasure the !el(are cost resulting (rom change in income ta2)

% *u'script n is suppressed (or notational ease herea(ter)

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&++#&+#& periods:) 3e categori9e these sectors into #: groups o( sectors =i)e), industries that

are classi(ied 'ased on -* Bomenclature &+#& Edition 'y the 3orld Customs rgani9ation

=3C>>)$ As noted a'ove, !e use o'servations (or si2digit -* sectors (rom each group to

per(orm the a'ove estimation) /he num'er o( o'servation is the smallest (or the leather

industry !ith &%+, !hile the largest is 7,877 o( the machinery industry) /a'le # presents the

categori9ation o( sectors into industries)

Table 1# Two-di!it sector classification

Ind*stry H+

odes

*mber of

-$igit

+ectors

*mber of

obser/ation

s

Animal +#+: :8 7+G

Hegeta'le +$#: #7% &,+78

Foodstu((s #$&% #&+ #,%1$

6ineral &:&7 G1 88$

Chemical and allied industries &G1G :7: $,8++

Plastics.Ru''ers 18%+ #7+ &,+%+

Ra! hides, skins, leather, and (urs %#%1 &+ &%+

3ood and !ood products %%%8 #1: #,$#&

/e2tiles :+$1 18G %,77$

Foot!ear.-eadgear $%$7 1: %&+

*tone.lass $G7# ##8 #,%&G

6etals 7&G1 %7# :,$%$

6achinery.Electrical G%G: $$: 7,877

/ransportation G$G8 87 #,#%$

6iscellaneous 8+87 &7# 1,&:&

Estimation (esults of Tariff)s Impact on Import *uantity

: 3e measure all nominal varia'les in constant &++: U* dollars

$ In this study, !e aim to identi(y the e((ect o( tari((s on sectors !ith import data (rom &++#&+#& only) Each group or industry consists o( several t!odigit -* sectors) Due to dataavaila'ility, there are several to!digit -* sectors that cannot 'e covered 'y this study) Fore2ample, the metals industry consist t!odigit -* sectors (rom 7&G1) -o!ever, 'ecause

there no import data e2ist (or sectors under to!digit -* o( 77, !e e2clude this sector (romthe metals industry)

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/he results in /a'le & sho! the e((ect o( tari(( on import 5uantity) It is revealed that tari(( !ill

only discourage the import o( chemical, stone.glass, and metals, 'ut not the other #&

industries4) Coe((icients (or (oodstu((s and machinery.electrical are signi(icantly positive)7

Bote that the percentage change in import 5uantity depends on the tari(( rates in the (ollo!ing

manner@

dq ij

d t ij=

β i1

1+t ij

Among the chemicalrelated sectors, the highest tari(( rate in &+#& !as #+0 and the lo!est

rate !as 9ero, !ith β i1 'eing 1)1G$) /hese results imply that the importing o( chemicals in

&+#& !ould have declined 'y 1)+G0 to 1)180 as a result o( a #0 increase in tari(( ratesdepending on the sector) For the stone.glass industry, this rate o( decline !as 'et!een &)%:0

and 1)+G0, and (or metals, the decline !as 'et!een &)8:0 and 1)%+0, !ith the highest tari((

rates at 1+0 and #:0, respectively, and the lo!est at 9ero (or 'oth)

Table 2# The effects of tariff on import +uantity

Ind*stry oefficient 0ob*st +.E.

Animal &)+1#% :)&7$:

Hegeta'le +)#81# +)#77G

Foodstu((s +)$&++ JJ +)1##%

6ineral 81)#1#$ 7#)+$$7

Chemical and allied industries 1)1G$# JJJ #)&8+:

Plastics.Ru''ers +)$8#7 #):#18

Ra! hides, skins, leather, and (urs %1)#18& 1G)1#87

3ood and !ood products :)%:1G :)1#%#

/e2tiles +)+8:% 1)1%:$

7 ne possi'le e2planation o( this is the o'jective o( tari(( policy is not only to protectdomestic industry, 'ut also to attract (oreign direct investment =FDI>) "y increasing tari(( rate,overnment o( Indonesia hopes that (oreign companies !ill move their production toIndonesia) Average tari(( rate in (oodstu((s industry increased (rom :)8G0 in &+#+ to $)#70 in&+#& and FDI o( this industry increased (rom U*;#)+1 'illion to U*;#)7G 'illion) Formachinery industry, average tari(( rate increased (rom 1)#G0 in &+#& to %)8:0 in &+#& andFDI o( this industry increased (rom U*;:G8): million to U*;&): 'illion) -o!ever, (oreigncompanies !ho produce in Indonesia still import some materials (rom their country, that is

!hy the import 5uantity also increased (rom U*;%%:)7 million to U*;#)# 'illion (or(oodstu((s industry and (rom U*;1): 'illion to U*;G)% 'illion (or machinery industry)

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Foot!ear.-eadgear +)&1#G &)G#8#

*tone.lass 1)#G:8 J #)$G81

6etals 1)187% JJ #)%#&$

6achinery.Electrical &)%817 JJ #)#7+1/ransportation &)&1%G &)#G:1

6iscellaneous #)%%78 &)GG1#

Bote@ JJJ@ signi(icant at #0, JJ@ signi(icant at :0< J@ signi(icant at #+0

,#1 The Effects of Tariffs on Social $elfare

3e no! use -ar'erger4s approach to measure the e((ect o( an incremental change in tari((

rates on social !el(are) /he results in /a'le 1 sho! that the metals industry e2periences the

highest marginal gain in social !el(are at ;1+)$& million as a result o( a #0 reduction in tari(( rates) For all three industries, the marginal !el(are gain is 'et!een &)780 and 1)#70 o( their

respective tari(( revenue) 3e estimate that a #0 reduction in tari(( rates, in turn, decreases the

tari(( revenue 'y ;#1:)G:, ;$):%, and ;#:+)#: million (or chemical, stone.glass, and metals

industries respectively)

Table ,# $elfare !ain of 1 decrease in tariff rates in 2012

Ind*stry '%i1tho*sand 2+34 5to import /al*e 5to tariff re/en*e

Chemical andallied industries &,&8# +)##70 1)&10

*tone.lass &,11$ +)&%#0 &)780

6etals 8,G8$ +)# 1)##0

Structural Estimation of Import "emand .unction

-ere in this section !e conduct a structural estimation o( the import demand (unction

descri'ed in the (ollo!ing simultaneous e5uation system) ?et us speci(y the import supply as

qijns =α i0+α i1 p ijn

w +α i2 cijn+α ¿ yn+α ij D j+υijn =&>

and the import demand as

qijnd =γ i0+γ i1 pijn

w +γ i2 cijn+γ ¿ yn+γ ij D j+εijn =1>

!here superscripts d and s indicate import demand and supply respectively, and c in the

supply e5uation =&> is a =natural> log o( China4s e2port to the !orld e2cluding Indonesia,

!hile the de(inition o( su'scripts and other varia'les are the same as a'ove) /his varia'le c is

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used as an instrument o( the !orld price !hen estimating the demand e5uation =1> 'y using

&*?* to e2amine the e((ect o( tari(( on import demand)G

/a'le % presents the &*?* estimates o(γ i2 as discussed a'ove8) Unlike the import 5uantity,

import demand o( (oodstu((s and machinery.electrical no! 'ecame signi(icantly negative)

/hese indicate that the demand can 'e discouraged in these industries< ho!ever, raising the

tari(( does not suppress their import 5uantity)

Table /# The effects of tariff on import demand

Ind*stry oefficient 0ob*st +.E

Animal :)+G8$ #&)7$::

Hegeta'le &:)&8%: G&)$G#8

Foodstu((s 1)817& J &)#%8$

6ineral :)G1G7 :7)#::+

Chemical and allied industries +)+71: #+)#7%7

Plastics.Ru''ers 88)%+7% #+#$)8G

Ra! hides, skins, leather, and (urs $%)$8%# $1)+&&:

3ood and !ood products &7)#G7# &&)GG+7

/e2tiles 7)+%#& $)1#:1Foot!ear.-eadgear $)$71: JJJ &)&&+#

*tone.lass $)#781 JJJ #):8$G

6etals 7)G%#7 JJJ &)+::&

6achinery.Electrical :)G7GG JJJ &)&%+7

/ransportation &)##:8 #)17#$

6iscellaneous #G)18 1:)787$ Bote@ JJJ@ signi(icant at #0, JJ@ signi(icant at :0< J@ signi(icant at #+0

3ith the (act that in e5uation =1> !e haveγ i1 p

ijn

w +γ i1 τ

ijn=γ

i2 p

ijn+(γ

i1−γ

i2) p

ijn

w

!here

pijn=τ ijn p ijnw

is the =natural log o(> domestic price,γ i2 gives the crossprice elasticity o(

import demand against the price o( domestic goods, and(γ i1−γ i2) gives the price elasticity

G 3e e2cluded c (rom the estimation o( import 5uantity as in e5uation =#> 'ecause it is unlikely (or China4se2port e2cluding Indonesia to in(luence the tari(( rates in Indonesia) -o!ever, !e per(orm Ftest to see !hetherc is relevant or not as instrumental varia'le =see appendices section to see the result>)

8 *ee appendi2 to see the comparison 'et!een ?* and &*?* estimation

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o( import demand itsel() Ftest results say that the null o(γ i1=γ i2 is rejected (or

(oot!ear.headgear, stone.glass, and metals !ith #0 signi(icance, and as (or machinery and

transportation the null hypothesis is rejected at :0 and #+0 respectively) -o!ever, (or other

#+ industries the hypothesis thatγ i1=γ i2 !as not rejected, in other !ords, import demand

is price inelastic in these industries)

oncludin! (emarks

/his study has e2amined the commonly accepted paradigm that tari((s discourages imports in

Indonesia using panel data (rom 1,18& si2digit sectors (rom &++# to &+#&) /he results sho!

that tari((s discourage the import o( only certain industries =namely, the chemical, stone.glass,

and metals industries> 'ut not others industries) /he study (inds that import 5uantity in these

industries !ould decrease appro2imately 10 as a result o( a #0 increase in tari(( rates)

-o!ever, the results 'ased on -ar'erger4s approach sho! that the !el(are gain (rom a #0

reduction in tari(( rates !ould 'e e5uivalent to appro2imately 10 o( the tari(( revenue in these

industries)

/he results (rom structural estimation revealed that, unlike their 5uantity, the import demand

(or (oodstu((s and machinery.electrical is negatively in(luenced 'y the tari((< and that the price

elasticity as !ell as crossprice elasticity against the domestic price are insigni(icant (or #+

out o( #: industries) /he o'served insensitivity o( import 5uantity and demand to tari(( and

prices is in large part due to the deepening o( intraAsian hori9ontal division o( la'or)

Especially (or those industries !ith a large amount o( processing trade, the import 5uantity is

kno!n to 'e inelastic to price or e2change rates)#+

/he implementation o( tari(( policy must there(ore account (or the variation in the e((ects o(

tari((s on di((erent sectors and must consider that the !el(are gain o( reducing tari(( rates is

nonnegligi'le in certain industries)

(eferences

#+ *ee, (or e2ample, ing =&+#+>

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"ertola, iuseppe, and Riccardo Faini) =#88#>) LImport Demand and Bontari(( "arriers@ /heImpact o( /rade ?i'erali9ation,M "o*rnal of $e/elopment Economics, 1%=8>@ &$8&G$)

Chetty, Raj) =&++8>) L*u((icient *tatistics (or 3el(are Analysis@ A "ridge 'et!een *tructuraland Reduced(orm 6ethods,M 6nn*al 0e/iew of Economics, Hol) #@ %:#%GG)

Fel'ernmayr, a'riel, "enjamin ung, and 6ario ?arch) =&+#1>) Lptimal /ari((s, Retaliation,and the 3el(are ?oss (rom /ari(( 3ars in the 6elit9 6odel,M "o*rnal of International

Economics, G8 =&+#1> #1&:)

Feldstein, 6artin *) =#888>) L/a2 Avoidance and the Dead!eight ?oss o( the Income /a2)M 0e/iew of Economics and +tatistics, G#=%>@ $7%$G+)

-ar'erger, Arnold C) =#8$%>)M/he 6easurement o( 3aste,M The 6merican Economic 0e/iew,:%=1>@ :G7$)

Kee, -), Bicita, A) and larreaga, 6) =&++G>) Import Demand Elasticities and /radeDistortions) The 0e/iew of Economics and +tatistics, 8+=%>@ $$$$G&

Paulino, Amelia *antos, and A)P) /hirl!all) =&++%>) L/he Impact o( /rade ?i'eralisation onE2ports, Imports, and the "alance o( Payments o( Developing Countries,M The Economic "o*rnal , ##%=%81>@ :+7&)

*tock, )-), )-) 3right and 6) Nogo) =&++&>) OA *urvey o( 3eak Instruments and 3eak Identi(ication in enerali9ed 6ethod o( 6oments,M "o*rnal of 7*siness and Economic+tatistics, &+=%>@ :#G&8)

/homakos, Dimitrios D), and 6ehmet A) Ulu'asoglu) =&++&>) L/he Impact o( /rade?i'erali9ation on Import Demand,M "o*rnal of Economic and +ocial 0esearch, %=#>@ #&$)

3ooldridge, ) =&++8>) Introd*ctory Econometrics) #st ed) 6ason, -@ *outh 3estern,Cengage ?earning

ing, Nu5ing) =&+#+>) L/he Nuan4s E2change Rates and its Impacts on the Prices o( apaneseand the U* Imports,M 6$7I wor8ing paper , Bo)&:$, 6ay &+#+)

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Romadhon Ardiansyah Tesis FE Naskah Ringkas 2015

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