Modeling the importance of financial liberalisation to Indonesia’s economic growth
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PhD Seminar (Econ)
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Indonesia has been struggling to return to its pre-Asian Financial Crisis growth rate. The latest development roadmap, dubbed “Making Indonesia 4.0”, aims to exploit high-tech manufacturing in order to pursue export-oriented growth. Realising the needs for external finance and technology, the government is trying to formulate more liberalised investment policies for both portfolio investment and direct investment. In this seminar, the potential gains to the Indonesian economy will be illustrated using a version of the Global Trade Analysis Project (GTAP) model that has been extended to consider variations in the cost of capital. The results suggest that a plausible reduction in the cost of capital translates to sizeable increases in capital investments and Indonesia’s gross domestic product.
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