THE EFFECTS OF WORLD BANK ASSISTANCE TO TRADE AND INVESTMENT IN INDONESIA

The World Bank assistance is believed to have its effect to the economic performance in many developing countries like Indonesia.This study aim to test the main hypothesis that there is no significant effect of the assistance of World Bank to trade and investment and its implication to the economic performance in Indonesia. The study is a quantitative and explanatory research by using cross sectional from primary data of 135 respondents. They were chosed by purposive random sampling as representative of academician, businessman and government official groups in Jakarta, Indonesia. The study also utilised time series data of World bank assistance and macro economic performance of Indonesia from 1985-2010.This research analysis used Structural Equation Modelling by utilizing AMOS 18.0 and SPSS 16.0. Findings of the study reject the main hypothesis and found that there is positive and significant effect of the World Bank assistance to trade and investment in Indonesia. The study also found that the positive and significant effect of World Bank assistance to trade has its positive and significant implication to the economic performance of Indonesia. However, the direct effect of World bank assistance to economic performance was negative and insignificant, and the effect of investment to ecoomic performance although positive but insignificant. Conclusion of the study supported the argument of the importance role of World Bank assistance to trade and investment development, but at the same time questioned the effect of such assistance to investment and its implication to economic performance. The study recommend to increase indicators of trade, especially trade control to increase the performance of trade; and to increase indicators of investment, especially streamlining procedure to expand investment performance. The study also recommend to increase government budget balance so that in return it would increase the economic performance of Indonesia.