| This study analyzes the effect of FTA on a country's trade flow,specifically it investigates the impact of ACFTA on Indonesia's total export and total import.The Agreement on Trade in Goods was settled in 2004 and was actualized on July 1st 2005 by the ASEAN nations,and later on July 20th 2005 by China.Under this Agreement,the six-members of ASEAN,including Singapore.Thailand,Philippines,Malaysia,Brunei,and Indonesia,and China were required to diminish tariff for 90%of their products within 5 years period before 2010,while the rest of ASEAN members were given 10 years for transition to eliminate 90%of the tariff.The ACFTA has opened up doors of opportunity for both ASEAN countries and Chinese exporters,and would keep reinforcing association amongst ASEAN and China.The purpose of this study is to analyze whether ACFTA brought significant impact toward Indonesia's Export and Import.This study also aims to test the correlation between FTA and Total Export and Total Import between Indonesia and China.Throughout this study,author chooses appropriate variable,such as tariff,to measure the FTA,and applies sophisticated statistical method to measure the impact of FTA on the trade.This study is a quantitative research which uses real economic data for statistical analysis.The statistical test for this study will be Paired Sample T-test to test the significance before and after the ACFTA,as well as Multiple Linear Regression to test the correlation of each variable with the dependent variable.The independent variables used for Multiple Linear Regression analysis are GDP,Indonesian Population,Chinese Population,FTA,and Tariff,whereas the dependent variables are Total Export and Total Import.Thus,author will construct two Multiple Regression model to measure the effect on each of them.Author also conduct Paired Sample T-test in order to measure how significant the reduction of export tariff and import tariff 11 years after ACFTA in effect,as well as how significant total export and total import has been boosted up within those years.This study utilized and gathered data from secondary sources through collecting data from official website by downloading all the statistical data related to this study.In order to conduct multiple linear regressions,the data of this study has passed four classic assumption tests which are Normality,Multicollinearity,Autocorrelation,and Heteroscedasticity.Author then conducted two regression with Total Export as the dependent variable in the first model,while Total Import in the later one.Result shows that all the independent variables significantly affecting Indonesia's Trade Flow.Moreover,GDP,Indonesian Population,Chinese Population,and FTA positively influence Total Export,whereas Export Tariff negatively influences Total Export.In the second regression model,this study found out that GDP,FTA and Export Tariff have significant correlation toward Total Import.Conversely,Indonesian Population and Chinese population does not have significant correlation toward Indonesia's Total Import.FTA has a significant effect toward the increase of both Total Export and Total Import.When ACFTA came to force Total Export was increased by 22.2%in average,whereas Total Import was boosted up by 18.7%in average.Furthermore,when Tariff was decreased by 1%,the Total Export was increased by 0.158%and Total Import by 0.16%.In order to know if there is significant difference of Total Export and Total Import before and after ACFTA coming into effect in 2005,author conducted Paired Sample T-test.Results showed that there was a significant difference between mean Total Export before ACFTA mean Total Export after ACFTA,there was also a significance difference between mean Total Import before ACFTA and mean Total Import after ACFTA.Moreover,Export Tariff and Import Tariff also have significant difference before and after ACFTA.Thus,all hypotheses in this study are accepted and at the same time have proven that ACFTA brought significant impact toward Indonesia's Trade Flows in long-term. |
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