Asymmetric Impact of Exchange Rate and Industrial Production on Indonesian Agricultural Exports

Strategic Insights -

Research from the Faculty of Agriculture has shown that the agricultural sector plays a crucial role in the economies of agrarian nations. The study, published in the Jurnal Ekonomi Pembangunan, investigated the asymmetric impact of exchange rates and industrial production indexes on Indonesian agricultural exports from January 2010 to August 2023. The findings reveal that both positive and negative exchange rate asymmetries significantly influence agricultural exports in the long run, with depreciation leading to increased agricultural exports in the short run. The study also found that a positive industrial production index consistently and significantly impacts agricultural exports in both the short and long run, demonstrating steady growth over time.

Key Takeaways:

  • The agricultural sector is crucial for the economies of agrarian nations, with Indonesia being a significant player in this sector.
  • The study employed the Non-Linear Autoregressive Distributed Lag (NARDL) model to capture the nuanced asymmetric effects of exchange rates and industrial production indexes on Indonesian agricultural exports.
  • The findings show that both positive and negative exchange rate asymmetries significantly influence agricultural exports in the long run, with depreciation leading to increased agricultural exports in the short run.
  • The exchange rate multiplier effect suggests that depreciation will lead to increased agricultural exports in the short run, partly due to future exchange rate interventions.
  • A positive industrial production index consistently and significantly impacts agricultural exports in both the short and long run, demonstrating steady growth over time.
  • Policymakers should consider these findings when controlling and maintaining the exchange rate at an optimal level.
  • Policymakers should prioritize the development and strengthening of the industrial sector to enhance agricultural export performance.
  • Additional authors for this research include Kamal Fachrurrozi, a professor at the Department of Agribusiness, Faculty of Agriculture, Almuslim University, Aceh, Indonesia.

Statistics:

  • The study investigated the asymmetric impact of exchange rates and industrial production indexes on Indonesian agricultural exports from January 2010 to August 2023.
  • The NARDL model captured the nuanced asymmetric effects of these predictors.
  • The findings reveal that both positive and negative exchange rate asymmetries significantly influence agricultural exports in the long run.
  • The exchange rate multiplier effect suggests that depreciation will lead to increased agricultural exports in the short run, partly due to future exchange rate interventions.
  • A positive industrial production index consistently and significantly impacts agricultural exports in both the short and long run, demonstrating steady growth over time.

Sources:

  • VerticalNews. "Investigators Publish New Report on Agriculture." Agriculture Week, July 24, 2025.
  • Jurnal Ekonomi Pembangunan. "Asymmetric Impact of Exchange Rate and Industrial Production on Indonesian Agricultural Exports." Jurnal Ekonomi Pembangunan, 2025,23(1).
  • Faculty of Agriculture. "Asymmetric Impact of Exchange Rate and Industrial Production on Indonesian Agricultural Exports." Jurnal Ekonomi Pembangunan, 2025,23(1).
  • https://doi-org.sdpl.idm.oclc.org/10.29259/jep.v23i1.23317 (free version of the journal article)