The Effect of Raw Material Imports, Exchange Rate, and Inflation on Non-Oil and Gas Industrial Exports in Indonesia, 2021-2023

Elang Rabbaanii Deandy Putra; Aprillia Nilasari

doi:10.59141/jiss.v7i10.2588

Authors

Elang Rabbaanii Deandy Putra Universitas Negeri Surabaya
Aprillia Nilasari Universitas Negeri Surabaya

DOI:

https://doi.org/10.59141/jiss.v7i10.2588

Keywords:

non-oil and gas exports, raw material imports, exchange rate, inflation

Abstract

Indonesia’s non-oil and gas industrial exports play an important role in supporting economic growth and generating foreign exchange; however, their performance is closely associated with imported production inputs, exchange-rate movements, and inflation. This study examined the effects of raw material imports, the rupiah–U.S. dollar exchange rate, and inflation on Indonesia’s non-oil and gas industrial exports during 2021–2023. The study employed a quantitative approach using 36 monthly observations obtained from Statistics Indonesia, Bank Indonesia, and the Ministry of Trade. The data were analyzed using a Vector Error Correction Model (VECM) in Stata 17, following tests of stationarity, optimal lag length, Johansen cointegration, model stability, and relevant diagnostic assumptions. The findings indicated the presence of two cointegrating relationships, confirming a long-run equilibrium among the variables. Raw material imports moved jointly with exports within the same long-run system, reflecting the dependence of export-oriented industries on imported production inputs. The exchange rate had a positive but statistically insignificant effect on exports (coefficient = 0.4711; p = 0.751), whereas inflation had a positive and statistically significant effect (coefficient = 4,446.265; p < 0.001). These findings imply that export policy should prioritize greater efficiency in raw material supply chains, prudent management of exchange-rate volatility, and measures to mitigate imported inflation rather than relying primarily on currency depreciation to enhance export competitiveness.

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