Determinan Neraca Perdagangan Indonesia Tahun 1989-2019: Pendekatan Partial Adjustment Model

The trade balance is one indicator to measure economic conditions in Indonesia. One of the problems with Indonesia's trade balance that is difficult to control is that the value of imports is greater than the value of its exports, so improving several sectors is needed to improve the trade balance. This study aimed to estimate the effect of economic growth, FDI, and the exchange rate on Indonesia's trade balance in 1989-2019 using the Partial Adjustment Model (PAM). The results of this study indicated that FDI had a negative effect on trade balance in Indonesia, while economic growth and the exchange rate have no effect on trade balance in Indonesia. The government is expected to enhance the performance of the trade sector through product quality competition that can increase exports, so that economic stability can be maintained and Indonesia can attract more investors. Furthermore, the government also needs to make efforts to maintain the stability of the rupiah exchange rate against foreign currencies, so that the stability of transactions in international trade is guaranteed