DETERMINANTS OF INDONESIA’S EXPORTS OF MANUFACTURED PRODUCTS: A PANEL DATA ANALYSIS

Indonesia's export has been decreasing since 2012. This problem has raised government's attention to increase the export performance. One sector that can be improved is manufacturing. This study analyzes the determinants of Indonesia's manufacturing export from 2005 to 2014. The major factors examined in this study include real exchange rate, foreign direct investment (FDI), gross domestic product (GDP) and trade policies. Those factors are examined by using panel data regression with a random effect model. The results revealed that relative change of exchange rate, real GDP, distance between two countries and average tariffs significantly affected the Indonesia's manufacturing export. It is recommended that Indonesian government maintains the exports to countries which have high GDP, expand the export market, stabilize Rupiahs exchange rate, encourage local industries to use advanced technologies, and facilitate the simplification of import procedures.