Research on World Agricultural Economy

The Effect of Exports and Imports on Agribusiness Activities on the Development of Indonesia's Economic Growth

Abdiyanto

Department of Economic Development, Universitas Pembangunan Panca Budi, Medan 20128, Indonesia

Iskandar Muda

Accounting Department, Universitas Sumatera Utara, Medan 20155, Indonesia

Ahnaf Ali Alsmady

Accounting Department, Faculty of Business Administration, University of Tabuk, Tabuk 71491, Saudi Arabia

Oksimana Darmawan

Social Researcher, Badan Riset & Inovasi Nasional (BRIN), Surabaya 60112, Indonesia

Siti Alya Zikriena Poetri

Accounting Department, Universitas Sumatera Utara, Medan 20155, Indonesia

Oberd Masro Pardamean Harianja

Accounting Department, Universitas Sumatera Utara, Medan 20155, Indonesia

Junjungan Filemon Tampubolon

Accounting Department, Universitas Sumatera Utara, Medan 20155, Indonesia

DOI: https://doi.org/10.36956/rwae.v6i4.2034

Received: 21 April 2025 | Revised: 13 June 2025 | Accepted: 2 July 2025 | Published Online: 29 October 2025

---

Abstract

Enhancing the agricultural sector plays a vital role in strengthening Indonesia's economic growth. This study aims to examine the impact of agricultural exports, imports, and investment on the development of the agricultural sector, as reflected in economic growth. The analysis covers the period from 2000 to 2015 using quarterly time series data. The research applies the vector autoregression (VAR) method. Findings from the causality analysis indicate that exports, imports, and investment in agriculture have a limited influence on agricultural sector growth indicators. However, growth in the agricultural sector significantly influences the levels of exports, imports, and investment in economic growth indicators. Additionally, the impulse response analysis reveals that investment responds more strongly to shocks in the agricultural sectors in Economic growth indicators compared to exports and imports. The variance of decomposition analysis shows that exports contribute more to the development of the agricultural sector than the combined contribution of imports and investment. This study has concluded that the full value of exports, imports, and investment in the agricultural sector does not significantly impact the economic growth rate; however, the rate of growth in the agricultural sector affects the full value of sector exports, imports, and investment in Indonesia. In addition, the authors recommended that the government strengthen the Indonesian economy by boosting exports and minimizing imports. This can be achieved by expanding export markets and enhancing the quality of locally produced goods. A trade surplus, where exports exceed imports, can contribute positively to the nation by increasing foreign exchange reserves.

Keywords: Export; Growth; Agriculture; Development

---

References

[1] Ebeling, R.M., 2025. Globalization: Free Trade Versus Managed Trade. In: Rangeley, M., Hannan, D. (eds.). Free Trade in the Twenty-First Century: Economic Theory and Political Reality. Springer Nature: Cham, Switzerland. pp. 675–691. DOI: https://doi.org/10.1007/978-3-031-67656-7_37

[2] Todaro, M.P., Smith, S.C., 2020. Economic Development, 13th ed. Pearson Education: London, UK. pp. 1–900.

[3] Niewiadomski, M., Waląg, P., Pink, M., 2025. The Circular Bioeconomy and Innovation. In: Pink, M.,Jozefowska, A. (eds.). The Circular Bioeconomy. OAPEN: Amsterdam, Netherlands. pp. 123–142. DOI: https://doi.org/10.4324/9781003453529-7

[4] World Bank, 2021. Indonesia economic prospects: Boosting the recovery. Available from: https://www.worldbank.org/en/country/indonesia/publication/indonesia-economic-prospects-iep-june-2021-boosting-the-recovery (cited 17 April 2025).

[5] FAO, 2020. The State of Food and Agriculture 2020: Overcoming water challenges in agriculture. Available from: https://www.fao.org/fsnforum/resources/fao-flagships/state-food-and-agriculture-2020-overcoming-water-challenges-agriculture (cited 21 March 2025).

[6] Abiad, Z., Abraham, R., El-Chaarani, H., et al., 2025. The impact of board of directors’ characteristics on the financial performance of the banking sector in Gulf Cooperation Council (GCC) countries: The moderating role of bank size. Journal of Risk and Financial Management. 18(1), 40. DOI: https://doi.org/10.3390/jrfm18010040

[7] Radelet, S., Sachs, J., 2000. The Onset of the East Asian Financial Crisis. In: Krugman, P. (ed.). Currency Crises. University of Chicago Press: Chicago, IL, USA. pp. 105–162.

[8] Lin, J.Y., 2012. New Structural Economics: A Framework for Rethinking Development and Policy. The World Bank: Washington, DC, United States. pp. 1–192.

[9] Dutta, U.P., Hazarika, N., 2025. Urbanization and carbon emissions: Panel evidence from 68 low-income and lower-middle-income countries. Journal of Urban Affairs. 47(1), 269–288. DOI: https://doi.org/10.1080/07352166.2023.2174871

[10] Homè, N.N.M., Moï, T., Tré, F.T.O., 2025. Inclusive growth and the challenges of economic vulnerability: a focused perspective on agricultural transformations in developing countries. Modern Economy. 16(1), 179–200. DOI: https://doi.org/10.4236/me.2025.161013

[11] Timmer, C.P., 2009. A World Without Agriculture: The Structural Transformation in Historical Perspective. AEI Press: Washington, DC, USA. pp. 1–100.

[12] Pingali, P., 2007. Agricultural growth and economic development: a view through the globalization lens. Agricultural Economics. 37(s1), 1–12. DOI: https://doi.org/10.1111/j.1574-0862.2007.00231.x

[13] Oktaviani, R., Hakim, D.B., Siregar, H., 2007. Impact of a lower oil subsidy on Indonesian macroeconomic performance, agricultural sector and poverty incidences: a recursive dynamic computable general equilibrium analysis. MPIA Working Paper No. 2007-28. DOI: https://doi.org/10.2139/ssrn.3171626

[14] Safitri, F.I., Taufiq, M., Utami, A.F., 2025. Analysis of market structure and competitiveness of Indonesian pepper exports against Vietnam, China, the United States and Germany. Journal of Applied Business, Taxation and Economics Research. 4(3), 484–497. DOI: https://doi.org/10.54408/jabter.v4i3.386

[15] Johnston, B.F., Mellor, J.W., 1961. The role of agriculture in economic development. The American Economic Review. 51(4), 566–593.

[16] McCullough, E.B., 2017. Labor productivity and employment gaps in Sub-Saharan Africa. Food Policy. 67, 133–152. DOI: https://doi.org/10.1016/j.foodpol.2016.09.013

[17] Clapp, J., 2017. Food Security and the Rise of the Global Food Regime. In: Bartel, R., Carter, A. (eds.). Law and the Governance of Water Resources: The Challenge of Sustainability. Routledge: Abingdon, UK. pp. 87–104.

[18] Anderson, K., Martin, W., 2005. Agricultural Trade Reform and the Doha Development Agenda. World Bank: Washington, DC, USA. pp. 1–200.

[19] McMillan, M., Rodrik, D., Verduzco-Gallo, Í., 2014. Globalization, structural change, and productivity growth, with an update on Africa. World Development. 63, 11–32. DOI: https://doi.org/10.1016/j.worlddev.2013.10.012

[20] Hazell, P., Diao, X., 2005. The Role of Agriculture and Small Farms in Economic Development. International Food Policy Research Institute: Washington, DC, USA.

[21] Christiaensen, L., Todo, Y., 2014. Poverty reduction during the rural–urban transformation – The role of the missing middle. World Development. 63, 43–58. DOI: https://doi.org/10.1016/j.worlddev.2013.10.002

[22] World Bank, 2019. Harvesting Prosperity: Technology and Productivity Growth in Agriculture. World Bank Group: Washington, DC, USA.

[23] Fanzo, J., Davis, C., McLaren, R., et al., 2020. The effect of climate change across food systems: implications for nutrition outcomes. Global Food Security. 26, 100397.

[24] Fitriana, N., Darwanto, D.H., Hartono, S., 2008. Analysis of economic growth and the advantages of Indonesia's agricultural sector. Agro Ekonomi. 15(1), 63–84. DOI: https://doi.org/10.22146/jae.18172

[25] Hayami, Y., 2007. Communities and Markets for Rural Development Under Globalization: A perspective from villages in Asia. In: Yotopoulos, P., Romano, D. (eds.). The Asymmetries of Globalization. Routledge: New York, NY, USA. pp. 105–123. DOI: https://doi.org/10.4324/9780203962299-15

[26] Otsuka, K., 2013. Food insecurity, income inequality, and the changing comparative advantage in world agriculture. Agricultural Economics. 44(s1), 7–18.

[27] Lihan, I.Y., 2003. Analysis of export development and its impact on Indonesia's economic growth. Journal of Economics and Business. 1(8), 15–21.

[28] Ghozali, I., 2018. Multivariate Analysis Application with IBM SPSS 23 Program. Diponegoro University Publishing Agency: Semarang, Indonesia. pp. 1–400.

[29] Batubara, D.M.H., 2015. Analysis of the relationship between exports, imports, GDP, and Indonesia's foreign debt for the period 1970–2013. Journal of Applied Economic Sciences. 10(5), 726–735.

[30] Djokoto, J.G., 2011. Inward foreign direct investment flows, growth, and agriculture in Ghana: a Granger causal analysis. International Journal of Economics and Finance. 3(6), 188–197. DOI: https://doi.org/10.5539/ijef.v3n6p188

[31] Tambunan, T.T., 2011. Crisis-adjustment strategies adopted by SMEs in coping with the 2008-2009 global economic crisis: the case of Indonesia. Asian Journal of Agriculture and Development. 8(1), 57–77. DOI: https://doi.org/10.37801/ajad2011.8.1.4

[32] Ratnawati, R., 2000. The influence of gross domestic product growth on Indonesia's export performance. Publishing Institute of the Faculty of Economics, University of Indonesia: Jawa Barat, Indonesia.

[33] Agus, D., Made, I., Ayuningsasi, A.A.K., 2016. The effect of exchange rate, price, and GDP on Australian cattle imports to Indonesia. E-Journal of Development Economics, Udayana University. 5(7), 165394.

[34] Kubaje, T.A., Amoasi-Andoh, R., Eklemet, I., et al., 2025. Foreign direct investments, tax revenue, and economic growth in Sub-Saharan Africa: does maximum tax apply? Cogent Economics & Finance. 13(1), 2446651. DOI: https://doi.org/10.1080/23322039.2024.2446651

[35] Adeleye, J.O., Adeteye, O.S., Adewuyi, M.O., 2015. Impact of international trade on economic growth in Nigeria (1988–2012). International Journal of Financial Research. 6(3), 163–172. DOI: https://doi.org/10.5430/ijfr.v6n3p163