The Importance of Agricultural Export Performance on the Economic Growth of Indonesia: The Impact of the COVID-19 Pandemic

Abstract

The agriculture sector has been affected by the COVID-19 pandemic. In Indonesia, agriculture is the most cultivated sector, especially in rural areas. During the COVID-pandemic, agriculture survived and positively contributed to economic growth. In light of this, this study aimed to investigate the effect of the COVID-19 pandemic on agricultural export and also the impact of agriculture export during the COVID-19 pandemic on economic growth. We also give some recommendations on ways to enhance agriculture export performance during the COVID-19 pandemic. The Indonesia agricultural export quarterly panel data from the years 2012 to 2021 were analyzed with the 2SLS regression model. Agriculture export was used as an endogenous variable and the COVID-19 pandemic was used as a dummy variable to reflect the number of years since the COVID-19 pandemic began. The empirical results demonstrate that agriculture export and the COVID-19 pandemic have positively affected economic growth. A 1% increase in agriculture export and the COVID-19 pandemic may increase economic growth by 0.69% and 0.16%, respectively. In contrast, the labor force and inflation were found to have inverse effects on economic growth. Therefore, we recommend that, during the COVID-19 pandemic, agriculture export should be used as an alternative way to increase economic growth. Policies could be developed to increase the agricultural export value.