Development of Indonesia Cocoa Production of Indonesia Cocoa

that exchange rate of Rupiah IDR to Euro € has a negative coefficient. This result shows that exchange rate depreciation of rupiah the towards dollar will not influence export enhancement. This is appropriate with the previous model. In the case of export tax, there is a different empirical result compared to the previous literature review in this analysis. Based on the analysis, export tax has positive correlation to trade flows of Indonesia cocoa to European Union and also has significant P-value. Normally, it is expected to be negative sign. When export tax increases, the trade flows of Indonesia cocoa to European Union will be decreasing. The possible reason for this condition is that the share Indonesia cocoa to European Union is very small compared to European Union needs. As we know most of cocoa consumed by European Union is supplied by Ivory Coast and Ghana. Indonesia cocoa production tends to increase over time. In another side, European Union cocoa consumption is increasing as well. It means that Indonesia has big market potential in European Union. Therefore, Export tax will not really influence the trade flows between Indonesia and European Union. This condition is also explained by Balasa 1976 in his paper, Export Incentives and Export Performance in Developing Countries: A comparative Analysis. He explained that exports from the developing countries are indicated by the fact that these countries account only for seven percent of the imports of goods in the developed nations were to increase at an average annual rate of 5 percent during a decade and the developing countries were to supply one- twentieth of this increment, they could increase their exports of manufactured goods to the developed nations. 51 The other strong reason, why variable of export tax has significant positive coefficient to the trade flows is the decreasing production of Ghana and Ivory Coast cocoa. Cocoa production of Ghana and Ivory Coast as Indonesia cocoa market competitors was decreasing because of bad weather in 2010 and 2011. Therefore Indonesia cocoa export to European Union was increasing significantly in the year when export tax imposed 2010 - 2011. Because of this reason, the impact of export tax which was supposed to be negative is covered by the impact of decreasing of Ivory Coast and Ghana cocoa production. This condition proves that cocoa export case HS 1804 is shock sensitive.

6.2 HS 1804 Cocoa Butter, Fat, and Oil

Overall, there are six variables used in analysis of HS 1804 with gravity model. Those are GDP of exporter country, GDP of importer country, population of exporter country and population of importer country, physical distance and exchange rate. We do not include export tax variable in the model since there is no export tax for code 1804 cocoa butter, fat and oil. Analysis is started with pooled least square as the basic model and then extended with fixed effect. The result of those econometrics models are shown in Table 8. Table 8 shows that the coefficients and standard error for each model are vary. But all of models are jointly significant. It is known from F test of all of models which are less than 0.10. R-Squared is 0.0013 or 0.13 percent. It means that only 0.13 percent of export value is explained by the input variables’ variance GDP of exporter country, GDP of importer country, population of exporter country and population of importer country, physical distance and exchange rate.