This study reports the impacts of trade liberalization on the economic performance of soybeans in Indonesia. Data for the econometric model reported in this paper was obtained from various sources. The econometric model, its representativeness and ability to describe the Indonesian soybean economy and its validation are briefly reported. The paper outlines the world soybean economy, identifying primary producers and exporters, importers and briefly outlining the Indonesian soybean economy. Detailed results of the following simulations are reported 1) full trade liberalization, with no trade restrictions by exporters or importers; 2) import country shock (Chinese imports increased by 30%; 3) export country shock (US production decreased by 25%); both importer and exporter shock. The results of these simulations are discussed in terms of the impact on world soybean price, world imports and exports and Indonesian domestic price and imports. The authors conclude with key recommendations for the Indonesian soybean economy: actively encouraging removal of subsidies to ensure efficient and fair trade as intended by trade liberalization; and increasing Indonesian domestic production through policy that facilitates adoption of improved production practices and technology and expansion of soybean production.

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