The conventional trade statistics may lead to an incomplete interpretation on the importance
of international trade, due to its recording system and the increasing globalization of
production process. The global value chain approach and the World Input-Output Table
were employed. This paper aims to estimate the extent to which Indonesia’s economy
relies on the final demand of the particular export market in term of generating incomes
and employment when the fragmentation of global production exists. The results show that
value added and employments induced by final demand in advanced economies are higher
than those generated by final demand in developing economies. Enhancing production
integration within the same region (East Asia or ASEAN) can be an effective strategy to
induce higher Indonesia’s income and employment directly and indirectly.
Keywords: Value Added, Global Value Chain, World Input-Output Table
Buletin Ilmiah Perdagangan, Vol.7 No.2, Desember 2013