DETERMINANTS OF EXPORT VALUE OF WEST JAVA PROVINCE: AN ERROR CORRECTION MODEL (ECM) APPROACH

Abstract

West Java is a province with the largest contribution to national export value. In 2018, the export contribution in West Java reached 16.89% of the total national export value. However, in recent years, West Java's trade balance shows that the rate of increase in imports is relatively high, especially for industrial needs. It indicates that West Java has a high dependence on imports, and if it is not controlled, it can cause a deficit in the trade balance. Therefore, the government's role is needed to increase export value to offset the import value increase. This study aims to determine the effect of KITE facilities, exchange rate, interest rate, and Human Development Index (HDI) on the export value of West Java. This research uses the quantitative method based on secondary data from monthly time series for 2016-2019. Analysis of research data using the Error Correction Model (ECM). Research result indicates that only the interest rate negatively and significantly affects West Java's export value. Meanwhile, the KITE facility, exchange rate, and the HDI partially do not affect the export value of West Java. However, the KITE facility, exchange rate, interest rate, and HDI simultaneously affect the export value of West Java.