Competitiveness Analysis and Factors Affecting Indonesian Cinnamon Exports

Abstract

Cinnamon is one of the plantation spice commodities that contributes to the Indonesian economy. Indonesia is the largest exporter country in the world regarding the total export volume of cinnamon, but regarding the total value of exports, Indonesia comes in second after Sri Lanka. This study aims to analyze the comparative competitiveness of Indonesian cinnamon among major competitors in the United States’ market and to analyze the factors that influence the competitiveness of Indonesian cinnamon exports in the United States. The data used in this study comprise secondary data from 2007 to 2021 obtained from various data sources. The revealed comparative advantage method was used in a comparative competitiveness analysis. Moreover, the factors that affect the competitiveness of Indonesian cinnamon exports in the United States were analyzed using the ordinary least squares method. The results of the analysis show that Indonesian cinnamon is competitive in the United States’ market, but Sri Lanka’s cinnamon exports have stronger competitiveness than Indonesia’s in the United States’ market. The results of the ordinary least squares method show that the exchange rate of the IDR (rupiah) against the USD, the volume of Indonesian cinnamon exports, the GDP per capita of the USA and the value of cinnamon exports to the USA have a significant effect on the competitiveness of Indonesian cinnamon exports to the United States.