Strengthening Indonesia-Dominican Republic Economic Relations: A Partial Equilibrium Free Trade Simulation Analysis and towards Establishing Indonesia-Dominican Republic Comprehensive Economic Partnership Agreement

Resumen

Indonesia and Dominican Republic diplomatic relations have common interest to strengthen the economic relations. Indonesia views Dominican Republic as potential emerging economic partner in the Caribbean region, meanwhile the Dominican Republic wants to promote trade and investment and insert its country integrated into the global economy. Using the TINA partial equilibrium dashboard, the study reveals the potential impact of the Indonesia-Dominican Republic bilateral free trade scenario leads a trade creation for Indonesia including vehicles and parts accessories; tissue; and iron or non-alloy steel. Meanwhile, the Dominican Republic’s potential export including cocoa beans; tobacco; and medical equipments. As for the trade diversion, the Dominican Republic leads to trade diversion with countries such as the United States, China, and Japan. Meanwhile, Indonesia is expected to import less from Ecuador, Ivory Coast, and Papua New Guinea. The study suggests to pursue Indonesia-Dominican Republic Comprehensive Economic Partnership Agreement to elevate the bilateral economic relations.