Impacts of export development on unemployment in Indonesia

Abstract

This study analyzes the effect of intrest rate (BI Rate), Foreign Direct Investments (FDI), inflation and Rupiah exchange rate on Indonesian export performance by using data from 1986-2016 with multiple linear regression analysis. The impact of the export development is on unemployment. In the period 1986-2016 Indonesian exports in general showed a positive development despite a decline in the period 2012-2016. This study finds that BI rate has a negative and significant effect on export, positive and significant on Foreign Direct Investments, positive and significant on inflation and positive and significant influence on exchange rate toward Indonesian exports. While the impact of export development on unemployment is positive and significant, it reflects that export activities do not absorb much labor. In addition to BI rate, FDI, inflation and exchange rates need to be policy-wise to trigger an increase in Indonesian exports.