Global growth has shrunk affected by 2008 global financial crisis, especially contributed by advanced economies
that experienced strongest decline. Indeed, it also affected their production and their demand of inputs, and hence
decreased exports of countries providing upstream commodities. Meanwhile, China and India record a remarkable
growth and only slightly affected by the crisis. Consistently, percentage of Indonesian exports to China and India,
especially raw commodities, has been rising since 2008, and likely to increase furthermore in the future.
This paper applies simple gravity model to evaluate the sensitivity of productions or income of these three
economies on Indonesian exports to China and India. Using various methods and assumptions, estimation results
suggest strong sensitivity of importers’ income and production. Indeed, it is likely that Indonesian exports to China
and India will increase furthermore and hence boosting Indonesia economic growth along with China and India,
making them the next growth triangle in Asia. While China nowadays is the strongest demand source for Indonesian
exports, India may be the significant contributor in the near future. Nevertheless, there still must be significant
reform in trade barriers and domestic economic strategy to support this potency in globalized world.
Keywords: Asian economics, international trade, gravity model
Buletin Ilmiah Perdagangan, Vol. 4 No. 2, Nopember 2010