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This paper explores the impacts of foreign and domestic demand on Indonesia's exports within demand and supply frameworks using aggregate data of 1971-2007. In contrast to many previous studies employing a single equation model, the paper investigates such relationship by dealing with plausible simultaneity between quantity and price within demand and supply of exports using a simultaneous equation framework, which also enables one to distinct between pull (foreign demand) and push (cost) factors of exports. To capture effects of secular and cyclical movements on exports, we dissect income variables into trend and business cycle as proxies of productive capacity and capacity utilization rate, respectively. Our results suggest that both demand-and supply-price elasticity are elastic, and secular and cyclical movements may have contrast effects on exports. The production capacity is positively attributed to exports performance, while the capacity utilization negatively affects exports, which confirms the customary version of domestic-demand pressure hypothesis. Some economic shocks and policies also play roles in determining exports performance. All estimated coefficients are statistically stable over the period under study. The findings draw policy implications namely the importance of price-based policy, provision of adequate and sound infrastructures, and further development of human capital-based industrialization.

Abstract-The paper aims to elucidate the evolution of competitiveness and quantifies the contribution of the geographical and commodity composition on Indonesian manufacturing exports classified by factor intensity for period of 1987 to 2008. Using constant market share (CMS) analysis and Revealed Comparative Advantage (RCA) indicators, we reveal that while mostly enjoying benefits from world export growth, Indonesia exports performance were deteriorated by the negative contribution of commodity composition and market distribution, and the role of competitiveness in manufacturing export performance, which was improved significantly right after trade liberalization policy unleashed in 1986 has been diminishing in recent years. In addition, most of Indonesian manufacturing exports were still concentrated in natural resource-and unskilled labor-intensive manufacturing commodities.Index Terms-Exports performance, specialization pattern, Indonesia, constant market share analysis, revealed comparative advantage.