The Impact of Imports from Japan on Indonesia’s Income Per Capita: An Aggregate and Sectoral Perspective

DOI

10.2991/978-94-6463-918-6_12How to use a DOI?

Keywords

Imports; Income Per Capita; Bilateral Trade; Japan-Indonesia

Abstract

This study aims to provide a comprehensive analysis of the impact of aggregated and disaggregated imports from Japan on Indonesia’s income per capita. This study uses the FMOLS, DOLS, and CCR models. In addition to these models, the Co-Integration Test, Granger Causality Test, Impulse Response Function, and Variance Decomposition Function are used in this study for empirical analyses. This research treats income per capita as the dependent variable, with aggregated imports and disaggregated imports (intermediate goods, capital goods, and consumer goods) as independent variables, along with key macroeconomic control variables such as Foreign Direct Investment (FDI) and the Exchange Rate (EXCR). The FMOLS and DOLS model tests indicate a significant positive long-run impact of aggregated and disaggregated imports from Japan on Indonesia’s income per capita, and the CCR model verified the consistency of the results. Granger causality tests highlight a directional causality between imports and income per capita. The Impulse Response Function and Variance Decomposition Function analyses quantify the contributions of explanatory variable to variation in income per capita over time. The findings suggest that Indonesia’s income per capita is significantly influenced by imports from Japan, with clear long-term benefits. The results call for policies that enhance the productivity of imported goods, improve the efficiency of capital formation, and maximize the benefits of trade openness. Future research could explore other sectoral differences in import contributions and potential strategies to strengthen Indonesia’s export base to complement its import-driven growth model.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Mohammad Saiyedul Islam
AU  - Lu Min
AU  - Xu Tao
AU  - Zheng Gong
AU  - Salma Salsabila
PY  - 2025
DA  - 2025/12/16
TI  - The Impact of Imports from Japan on Indonesia’s Income Per Capita: An Aggregate and Sectoral Perspective
BT  - Proceedings of the 9th International Conference on Strategic and Global Studies 2025 ((ICSGS 2025)
PB  - Atlantis Press
SP  - 184
EP  - 203
SN  - 2667-128X
UR  - https://doi.org/10.2991/978-94-6463-918-6_12
DO  - 10.2991/978-94-6463-918-6_12
ID  - Islam2025
ER  -