Nazla Atikah Hikmatias Nasution, Zhena Nofhatiaz Zahra, Nabila Umami Octariyadi, Sahara Sahara

Do Coffee Exports Have an Impact on Economic Growth in Indonesia?

Introduction

Do coffee exports have an impact on economic growth in indonesia?. Explore the impact of coffee exports and exchange rates on Indonesia's economic growth (1993-2024) using the ARDL model. Uncover short-term and long-term effects for policy insights.

Abstract

Research Originality: The novelty lies in exploring an under-researched topic, with limited studies on the impact of coffee exports from 1993 to 2024, considering key events such as the Asian financial crisis and the COVID-19 pandemic. Research Objectives: This study examines the short-term and long-term effects of exchange rates and coffee exports on economic growth. Research Methods: This study utilizes data from 1993 to 2024 on exchange rates, coffee exports, recessions, and economic growth in Indonesia. The analysis is conducted using the ARDL model. Empirical Results: Exchange rate depreciation has a negative impact on GDP in the short term, while past depreciation has a positive effect on economic growth. The value of coffee exports has a marginal positive effect on GDP, while the volume of coffee exports shows inconsistent impacts. Recession does not significantly affect GDP, likely due to policy responses. Long-term estimates show a stable relationship among the variables, with adjustments occurring at a rate of 35.43% per period. Implications: The government should thoroughly evaluate existing policies with a focus on promoting economic growth, while enhancing the quality of Indonesian coffee exports to remain competitive globally. JEL Classification: C32, E01, F10, O11 How to Cite:Hikmatias, N.A., Zahra, Z.N., Octariyadi, N.U., & Sahara. (2025). Do Coffee Exports Have an Impact on Economic Growth in Indonesia?. Signifikan: Jurnal Ilmu Ekonomi, 14(2), 489-504. https://doi.org/10.15408/sjie.v14i2.46425.

Review

This study by Hikmatias et al. addresses a pertinent and under-researched area concerning the impact of coffee exports on Indonesia's economic growth. Spanning a significant period from 1993 to 2024, the research aims to fill a notable gap in the literature, particularly by incorporating major economic events such as the Asian financial crisis and the COVID-19 pandemic. The stated objectives focus on discerning both the short-term and long-term effects of exchange rates and coffee exports, thereby offering a comprehensive perspective on these critical drivers of economic performance within an important commodity-exporting nation like Indonesia. Methodologically, the authors employ the ARDL (Autoregressive Distributed Lag) model, which is well-suited for analyzing cointegrating relationships between variables, even with mixed orders of integration. The dataset utilized is robust, encompassing exchange rates, coffee exports, instances of recession, and economic growth data for Indonesia over the specified period. The empirical results reveal several interesting dynamics: exchange rate depreciation exhibits a short-term negative impact on GDP, yet past depreciation surprisingly fosters positive economic growth. While the value of coffee exports has a marginal positive effect, the volume shows inconsistent impacts. Interestingly, recessions are found not to significantly affect GDP, a finding attributed by the authors to effective policy responses. A stable long-term relationship among the variables is established, with an adjustment rate of approximately 35.43% per period. The implications drawn from these findings are practical and significant for policymakers. The study underscores the necessity for the Indonesian government to thoroughly evaluate existing policies to effectively promote economic growth. Crucially, it highlights the importance of enhancing the quality of Indonesian coffee exports. This strategic focus is essential not only for leveraging the positive economic contributions of coffee but also for maintaining and strengthening Indonesia's competitive position in the global coffee market. The research thus provides valuable insights for strategic planning in trade and economic development.

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