Bilateral Relations in a Context of Geopolitical Change
Edited by Peter A.G. van Bergeijk and Selwyn J.V. Moons
Chapter 9: Indonesian trade promotion
The author analyses the role of Trade Attachés and International Trade Promotion Centres (ITPCs)using a multimethod approach that consists of (1) a benchmark analysis against Thailand and Malaysia; (2) a standard gravity panel model estimated with fixed and random effects and also used in before-after analysis; (3) document analysis; and (4) background interviews with Indonesian trade representatives in Australia, Indonesia and the Netherlands. ITPCs and Trade Attachés yield positive and significant effects on export. In contrast, the presence of an embassy and consulate in the host country is not significantly correlated to bilateral trade flows. Economic diplomacy is important for building a good country image and to promote an emerging market as a reliable trading partner with high quality export products. Economic diplomacy, however, is not a panacea as the author clarifies while discussing challenges such as lacking exporter preparedness, substandard logistics infrastructure and budgets that remain below those of neighbouring countries.
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