MODELLING THE EFFECT OF INTERNATIONAL ECONOMIC COOPERATION ON COAL CONSUMPTION IN INDONESIA

• Main Author: PUSPITA (NIM : 22115018), MEGA
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/23026
• Institution: Institut Teknologi Bandung

International economic cooperation is one means to encourage the realisation of liberalisation of trade and investment in participant countries. For a developing country, free trade can lead to a deficit in the trade balance through increased imports of consumer goods. In addition, foreign investment will trigger the growth of business sectors and encourage increased production activities. Production activities require raw materials such as energy, which is largely sourced from coal which is limited and non-renewable. <br /> <br /> <br /> To strengthen the hypothesis, a causality test was conducted to identify relationships between export, imports, gross domestic product (GDP), foreign investment, and coal consumption. Furthermore, econometric modeling using ordinary least square method is used to represent the effect of international economic cooperation on coal consumption in Indonesia. The model then be used to forecast future coal consumption and formulate policies related to international economic cooperation and energy supply. <br /> <br /> <br /> From the model it is known that an increase of one unit of GDP will increase the consumption of coal by 0.7110977 while the increase of one unit of foreign investment will increase the consumption of coal by 0.1941997. An increase of one unit of export will increase the consumption of coal by 0.04469916, while an increase of one unit of import will reduce the consumption of coal by 0.1007024. In addition, Indonesia is expected to consume 164.4 million tons of coal by 2025.