Year: 2025 | Month: December | Volume: 12 | Issue: 12 | Pages: 179-185
DOI: https://doi.org/10.52403/ijrr.20251221
Trade Exposure on International Trade in Indonesia and China
Dewi Mahrani Rangkuty1, Lia Nazliana Nasution2, Resti Triana Ningsih3
1,2,3Economics Department, Universitas Pembangunan Panca Budi, Indonesia
Corresponding Author: Resti Triana Ningsih
ABSTRACT
This study aims to analyze the effect of trade exposure, inflation, exchange rate, foreign exchange reserves, and trade balance on economic growth in Indonesia and China during the period 1995–2024. The methods used are the Generalized Method of Moments (GMM) with a First Difference approach and System GMM using dynamic panel data from the World Bank. The results show that trade exposure, exchange rates, and foreign exchange reserves have a significant positive effect on economic growth, while inflation has a significant negative effect. The trade balance does not have a significant effect on economic growth. The previous period's GDP variable has a significant positive effect, indicating the existence of an economic growth inertia effect. The GMM model is declared valid through the Sargan and Arellano–Bond tests. These findings emphasize the importance of macroeconomic stability and trade openness in promoting economic growth in developing countries.
Keywords: Trade Exposure, Inflation, Exchange Rate, Foreign Exchange Reserves, GMM, Economic Growth
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