Study of Economic Powerhouse Opportunities between Australia and Indonesia Using Input-Output Table, Bilateral Trade Pattern and Concentration Ratio

The Project at A Glance

Trade between Indonesia and Australia has generally been low. Investment has also been underperforming. The Indonesia-Australia CEPA adopts the powerhouse, aiming to build an integrated value chain between the two countries. The overall objective of this project is to identify existing and possible economic powerhouse opportunities between Indonesia and Australia, building on the countries’ comparative advantages to build value chains for a product or service that can be sold competitively to third markets.

The study will look at the compositions of value chains among sectors in Indonesia and Australia to draw insights from the value-added structures of sectors in each country. An assessment of each partner’s contribution to the other country’s value added will be carried out and the sectors that can significantly benefit from value chains between Indonesia and Australia will be identified. The findings will be used to recommend strategic third-country markets and the economic powerhouse opportunities with greatest potential that could be supported.

Our Strategy and Impact

Our approach for this study will comprise:

  • Literature review on building economic powerhouses and boosting value chain connectivity;
  • Indicators to identify the potential economic powerhouses’ opportunities between Australia and Indonesia including Global Value Chain (GVC) participation and GVC forward and backward participation indexes among others;
  • Data collection and analysis to create useful insights for the bilateral economic powerhouse model;
  • Creation of a database with the relevant indicators to support the ongoing identification of economic powerhouse opportunities and mapping the value-added composition of outputs and exports.

Our Core Solutions

As businesses seek to expand operations into new markets, the need to explore global supply chains and understand the international regulatory framework is crucial to competitively expand into new product/service lines and markets, reduce costs, increase revenue and reduce portfolio risks. At International Economics, we build tailor-made strategies for both import and export-oriented business solutions.

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