Real Exchange Rate, Trade Balance and Deindustrialization in Indonesia

  • Fithra Faisal Hastiadi
  • Amelia Nurunnisa


This chapter raises the current issues in Indonesia that link the instability of exchange rates to the deindustrialization phenomenon. This association has not been studied directly in previous studies. This chapter finds that these problems are interrelated and cannot be separated from each other. Deindustrialization problems in Indonesia, which are explained by the decline in manufacturing exports, decline in manufacturing labour productivity, the trade balance deficit and investment displacement from the tradable sector (manufacturing), directly and indirectly affect the exchange rate. The implication of this chapter is that government should pay attention to the Indonesian manufacturing sector in solving the exchange rate problem.


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© The Author(s) 2017

Authors and Affiliations

  • Fithra Faisal Hastiadi
    • 1
  • Amelia Nurunnisa
    • 1
  1. 1.Faculty of Economics and BusinessUniversity of IndonesiaDepokIndonesia

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