AGRARIS: Journal of Agribusiness Puteri Fadjria Insan Sa'diyah*, Dwidjono Hadi Darwanto

and Rural Development Research Universitas Gadjah Mada, Indonesia

Vol. 6 No. 2: July-December 2020
*) Correspondence email: [email protected]
Article History:
Submitted at November 11th, 2019
Accepted at October 21th, 2020

Indonesian Cinnamon Competitiveness and Competitor

Countries in International Market
DOI: https://doi.org/10.18196/agr.6295

ABSTRACT
Indonesia is the largest cinnamon producing country in the international market.
The presence of competing countries causes competition for completed
cinnamon demand in the international market. International trade requires that
each country has specialization and the ability to be able to compete for existing
markets. This study analyzes the competitiveness of Indonesia's cinnamon exports
and the competitors (China, Vietnam, Sri Lanka, and Madagascar) by looking at
comparative and competitive advantages along with factors that can influence
them. The analysis period used in this study is from 2000 to 2017.
Competitiveness analysis is measured by using the Trade Specialization Index
(TSI) and Export Competitive Index (XCI) analysis methods, while the analysis
of factors that can affect competitiveness performance is analyzed using the panel
data regression method. The results of this study indicated that Indonesia and
the competitors have comparative advantages and tend to be cinnamon exporting
countries in the International Market, besides that Indonesia and competitors
(China, Vietnam, and Madagascar) have competitive advantages and cinnamon
exports of these countries increase from the previous year, so that the country was
able to compete for cinnamon exports on the International Market. Factors that
can affect the performance of the export competitiveness of cinnamon in
Indonesia and competitors are productivity, market share, export prices, and
domestic consumption.
Keywords: Cinnamon, Competitiveness, Export, International Market

INTRODUCTION
Cinnamon is one of Indonesia's leading spices which has great potential for export in
the international market. The availability of natural resources such as land area, a climate that
is in accordance with the conditions for growing cinnamon, and followed by abundant human
resources are Indonesia's potential to increase exports (Ferry, 2013). Availability of land area
for Indonesian cinnamon has increased every year. The growth rate of Indonesia's cinnamon
land area during the 2000-2017 period increased by 3.05% (FAOSTAT, 2019).The land area
of Indonesian cinnamon in 2000 was 66,000 ha, and continued to increase until 2017
reaching 105,530 ha. Based on data FAOSTAT (2019), Indonesia is a country that has the
largest land area for cinnamon in the international market. The land area that continues to

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increase has a positive impact on Indonesia to be able to continue to produce cinnamon in a

sustainable manner (Pradipta & Firdaus, 2014). The growth rate of Indonesia's cinnamon
production during the 2000-2017 period increased by 5.09% (FAOSTAT, 2019). The
availability of abundant land areas makes Indonesia one of the countries with the highest
cinnamon production in the world compared to other major producing countries, namely
China, Vietnam, Sri Lanka, and Madagascar (FAOSTAT, 2019). The growth of Indonesian
cinnamon production, which tends to increase every year, is in line with the increasing
demand for Indonesian cinnamon in the international market. The rate of demand for
Indonesian cinnamon in the international market during the 2000-2017 period increased by
5% (UNComtrade, 2019). This shows that Indonesian cinnamon still has a prospective
market in the international market. The demand for Indonesian cinnamon which tends to
increase in the international market is due to the use of processed cinnamon. The processed
product of cinnamon is not only used for food flavoring ingredients, but cinnamon can be
processed into essential oils to be used in the industrial sector, namely as an ingredient in
cosmetics, perfume, and as medicine, which is a special attraction for importing countries
(Hermawan, 2015). The existence of competing countries results in competition to meet the
demand for cinnamon in the international market. Therefore, in international trade, every
country must have specialization and also the ability to be able to compete for existing markets
(Bustami & Hidayat, 2013).
Research on the export competitiveness of cinnamon in particular in the international
market has not been widely found. Research conducted by Nurhayati (2018) described the
analysis of the competitiveness of Indonesia's leading spices in ten main destination countries
(Malaysia, UAE, Canada, Turkey, the Netherlands, Germany, Brazil, USA, Dominica, and
Algeria). Nurhayati (2018) states that the RCA value of Indonesian cinnamon in the ten main
destination countries was competitive, whereas based on the EPD analysis, Indonesian
cinnamon commodity exports were in a rising star position in the markets of Malaysia,
Canada, Turkey, the Netherlands, Brazil, the United States and the Dominican Republic. On
the contrary, the markets of the United Arab Emirates and Algeria are in a falling star position,
and the German market is in a lost opportunity position. Research by Anggrasari & Mulyo
(2019) used the Intra Industry Trade (IIT) method to see whether the trade in Indonesian
spice commodities in the international market is partially interindustry. Anggrasari & Mulyo
(2019) stated that in 2002-2016 Indonesian cinnamon had an IIT index which was still
relatively low in the international market so that the Indonesian cinnamon trade was inter-
industry and only relied on comparative advantage.
In this study, a novelty measurement of the export competitiveness of Indonesian
cinnamon and competing countries was carried out based on the Trade Specialization Index
(TSI) analysis method, the Export Competitive Index (XCI), and the panel data regression
method that had not been used in previous studies. The Trade Specialization Index (TSI)
analysis is used to measure competitiveness based on comparative advantage, the Export
Competitive Index (XCI) is used to measure competitiveness based on competitive advantage,
and panel data regression is used to determine the factors that affect the performance of the

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competitiveness of cinnamon exports. Analysis of the factors that can affect the performance
of competitiveness needs to be done because the competitiveness of a traded commodity from
time to time may change, such as at certain times it can have strong competitiveness, but at
other times it can change and is not competitive. There are two kinds of factors that can affect
the export competitiveness of a commodity, namely factors from the demand side and factors
from the supply side. The demand factor consists of income, tariffs, and the tastes of the world
community or destination countries, while the supply factor is influenced by the domestic
industry in terms of providing capital, human resources, and technology (Tambunan, 2004).
Iskandar et al., (2012) stated that the factors that can affect the performance of the
competitiveness of Indonesian cinnamon in the American market include export volume and
world cinnamon prices. This study explains that the export volume and world cinnamon
prices have a positive effect on the performance of Indonesia's cinnamon export
competitiveness in the American market. This shows that the higher the volume of Indonesian
cinnamon exports and the higher the world price of cinnamon will have an impact on
improving the competitiveness performance of Indonesian cinnamon in the American
market. In this study, the variables used in the panel data regression model are productivity,
market share, export prices and domestic consumption. The research objective was to
determine the competitiveness of Indonesian cinnamon in the international market based on
its comparative and competitive advantages, as well as to find out what factors can affect the
export competitiveness performance of Indonesian cinnamon and competing countries in the
international market. This research contributes to complementing the results of previous
research on the export of Indonesian cinnamon in the international market, beside that the
results of this study also provide benefits in policy formation, which can be taken into
consideration in formulating factors that can increase the competitiveness of Indonesian
cinnamon export commodities. This can be used as information in consideration of decision
making regarding business strategies and provide an overview of the prospects for Indonesian
cinnamon commodity.

RESEARCH METHOD
The basic method used in this research is descriptive method. The type of data used
in this research is secondary data and quantitative data. The data used is in the form of time
series data. Secondary data can be obtained from the Food and Agriculture Organization
Statistics Division (FAOSTAT), and the United Nations Commodity of Trade (UN
COMTRADE), as well as trademarks for the 18-year period (2000-2017). Harmonized System
or HS trade code of cinnamon observed in this study is (0906). The HS trade code is the
numbering on each item which is formed with the aim of facilitating trade transactions on
the international market. The analytical method used is as follows:
Competitiveness Performance Analysis
TSI is one of the competitiveness methods used to see if a country tends to be an
exporter or importer of a commodity being traded and the export stage of a traded commodity
based on its comparative advantage. Mathematically, TSI can be formulated as follows:

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𝑋𝑖𝑘 − 𝑀𝑖𝑘
TSI =
𝑋𝑖𝑘 + 𝑀𝑖𝑘
Note:
𝑋𝑖𝑘 : Export value of commodity k (cinnamon) country i
𝑀𝑖𝑘 : Import value of commodity k (cinnamon) country i
The TSI has a value ranging from -1 to +1. If the value of TSI > 0, then the commodity
concerned has strong competitiveness or in other words a country tends to be the exporter of
the commodity, if the TSI value < 0 means that the commodity concerned has low
competitiveness or in other words a country tends to be the importer of the commodity
(Ikasari & Ngatindriatun, 2016).
TSI can be used to identify the growth rate of a commodity in the international
market, which can be grouped into five stages, namely the introduction stage (-1 < TSI ≤ -0.5),
the import substitution stage (-0.5 < TSI ≤ 0), the expansion stage export (0 < TSI ≤ 0.8), the
independence stage (TSI = 1), and the Re-import stage (0.8 > TSI ≤ 0). The export competitive
index is used to identify the success of export production in competition in the international
market for a country based on a country's competitive advantage (Rochmat et al., 2017).
Mathematically, XCI can be formulated as follows:
𝑋𝐶𝑖𝑘 = (𝑋𝑖𝑘 /𝑋𝑤
𝑘
)t / (𝑋𝑖𝑘 /𝑋𝑤
𝑘
)t-1
Note:
𝑋𝑖𝑘 : Export value of commodity k (cinnamon) country i
𝑋𝑤𝑘 : Export value of commodity k (cinnamon) in the world
t : Current year
t-1 : The year before
The criteria used are as follows:
XC > 1, indicates that the export of commodity (k) from country (i) has increased from the
previous year, meaning that the country is able to compete for commodity exports (k) in the
international market.
XC ≤ 1, indicating that the export of commodity (k) from country (i) has not increased and
even decreased from the previous year, meaning that the country is unable to compete for
commodity exports (k) in the international market.
Factor Analysis
Analysis of the factors that influence the performance of cinnamon trade in
international markets using panel data regression analysis. Panel data regression has data
characteristics that are cross section and time series. Panel data is considered capable of
overcoming the intercorrelation between the independent variables which in turn can lead to
inaccurate data estimates so that the panel data method is more appropriate to use (Ajija et
al., 2011). The crosssection data used in this study were five major cinnamon producing
countries in the international market (Indonesia, China, Vietnam, Sri Lanka, and
Madagascar), while the time series data used were 2000-2017 data. The panel regression model
used is as follows:

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𝐿𝑛 𝑁𝐸𝑖𝑡 = α + β1 LnPro𝑡𝑖 + β2 LnPP𝑖𝑡 + β3 LnHE𝑖𝑡 + β4 LnKD𝑡𝑖 + e
Note:
Ln 𝑁𝐸𝑖𝑡 : The export value of cinnamon country i in year t
α : Interception
β1 – β4 : Regression coefficient
Ln 𝑃𝑟𝑜𝑖𝑡 : Productivity of cinnamon country i in year t
𝑡
Ln 𝑃𝑃𝑖 : The market share of cinnamon country i in year t
𝑡
Ln 𝐻𝐸𝑖 : The export price of cinnamon country i in year t
Ln 𝐾𝐷𝑖𝑡 : The domestic consumption of cinnamon country i in year t
e : Error term
In this study, the best model was selected from three possible models in the panel data
regression analysis. These models include the common effect, fixed effect, and random effect.
Generally, three tests are used, namely the Chow, Hausman, and Breusch-Pagan tests in
selecting the best model (Ajija et al., 2011). This test is done by comparing the results of one
model with another model after regression.

RESULT AND DISCUSSIONS

Export competitiveness is the ability of a commodity to enter a foreign market and the
ability to survive in that market. TSI is used to determine the tendency of a country as an
exporter or importer country and to determine the stages of development of the cinnamon
commodity trade in the international market. Comparison of the development of Indonesian
cinnamon commodity TSI and its competitors in the international market can be seen in
Table 1.
Based on the results of the analysis over a period of 18 years, from 2000 to 2017, the
average TSI value of Indonesian cinnamon tends to be positive, indicating that Indonesia is a
net exporter country in the cinnamon trade in the international market (Aprilia et al., 2013).
The TSI value of Indonesian cinnamon, which tends to be positive and close to 1, shows that
the supply of Indonesian cinnamon is greater than the demand for cinnamon in Indonesia,
so that Indonesia tends to export. The development of Indonesian cinnamon commodity
exports in the international market from 2000-2017 has fluctuated every year even though it
tends to be an exporter country. In 2000-2003 Indonesia was at the stage of expanding exports,
which means that Indonesia has reached an abundant production stage so that it began to
develop cinnamon exports in the international market.
Based on table 1, the value of Indonesia's TSI in 2004 was 1, which means that in that
year Indonesia had reached the stage of independence. The independence stage is the stage
where the Indonesian cinnamon commodity has experienced technological standardization.
However, even so in 2005-2017 the TSI value of Indonesian cinnamon actually decreased so
that Indonesia was at the stage of importing again. At the stage of independence or maturity,
the TSI value can decrease between 1 and 0, because these product industries begin to reduce
their exports because they gradually fail to compete with industrial newcomers from other
countries in the international market, but in the domestic market the production is still more
than by request. The decline in the value of Indonesian cinnamon TSI in the international

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market, which is decreasing at the re-import stage, is because the average rate of increase in
imports of Indonesian cinnamon each year is greater than the rate of increase in exports. In
addition, the reason why Indonesia is at the stage of re-importing in the cinnamon trade is
because Indonesia is still importing cinnamon from other producing countries which aims to
improve the quality of Indonesian cinnamon to be exported.
TABLE 1. DEVELOPMENT OF TSI IN INDONESIAN AND MAJOR CINNAMON PRODUCING COUNTRIES IN THE INTERNATIONAL
MARKET, 2000-2017
Development of TSI Cinnamon
Year Indonesia China Vietnam Sri Lanka Madagascar
2000 0.95 0.99 1.00 1.00 1.00
2001 0.88 0.99 1.00 1.00 1.00
2002 0.92 1.00 1.00 1.00 1.00
2003 0.99 1.00 0.99 0.99 0.97
2004 1.00 1.00 0.99 1.00 1.00
2005 0.93 0.99 0.96 1.00 1.00
2006 0.96 0.99 0.99 0.99 1.00
2007 0.92 0.98 0.96 0.99 0.99
2008 0.95 0.97 0.93 0.99 1.00
2009 0.84 0.99 0.92 0.98 1.00
2010 0.93 0.99 0.89 1.00 1.00
2011 0.93 0.98 0.93 0.99 1.00
2012 0.93 0.98 0.95 0.99 1.00
2013 0.92 0.99 0.92 1.00 1.00
2014 0.99 0.98 0.91 0.98 1.00
2015 0.93 0.97 0.94 1.00 1.00
2016 0.91 0.97 0.91 1.00 1.00
2017 0.96 0.98 0.78 0.99 1.00
Average 0.94 0.98 0.94 0.99 1.00
Source: Secondary Data Analysis (UNComtrade, 2019)
Indonesia's position, which tends to be a cinnamon exporter in the international
market, also does not make Indonesia a leading country in exporting cinnamon in the
international market. Based on the results of the TSI calculation analysis, the average TSI
calculation for Indonesian cinnamon and its competing countries shows that the five main
cinnamon producing countries in the international market have a tendency to become
cinnamon exporters and are at the stage of re-importing (Sri Lanka, China, Indonesia and
Vietnam.), while Madagascar is already at a stage of independence. Madagascar can be in an
independent stage because it is able to increase cinnamon exports and reduce cinnamon
imports from 2008-2017 so that it has a TSI value equal to 1. This is indicated by the average
growth rate of Madagascar cinnamon imports is smaller than Indonesia and its main
competitor countries other.
Export Competitiveness Index (XCI) analysis is used to see whether the Indonesian
cinnamon commodity and competing countries have the ability to compete based on their

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competitive advantage. The competitive advantage of a country can only be built through
continuous innovation. Continuous innovation can be done by utilizing technology,
entrepreneurship, increasing productivity, and providing skilled labor (Salvatore, 2014). Table
2 shows the XCI development of Indonesian cinnamon and its competitors in the
international market.
TABLE 2. DEVELOPMENT OF XCI IN INDONESIAN AND MAJOR CINNAMON PRODUCING COUNTRIES IN THE INTERNATIONAL
MARKET, 2000-2017
Development of XCI Cinnamon
Year Indonesia China Vietnam Sri Lanka Madagascar
2000 0.9 0.77 1.34 1.03 0.86
2001 0.82 1.37 1.01 0.89 1.10
2002 1.07 1.06 0.95 0.96 0.95
2003 1.05 0.8 0.92 1.11 0.90
2004 1.16 1.15 1.26 0.86 1.05
2005 0.83 0.85 0.97 1.17 0.72
2006 1.00 1.01 1.38 0.91 1.36
2007 1.21 0.94 0.98 0.99 2.78
2008 1.01 0.85 1.06 1.10 1.04
2009 0.81 1.28 1.27 0.85 1.05
2010 1.34 0.97 1.09 0.95 1.11
2011 0.92 1.06 0.92 1.07 0.63
2012 0.86 0.9 0.95 1.13 0.87
2013 1.25 0.97 1.27 0.86 1.26
2014 1.20 0.97 1.28 0.81 1.27
2015 0.94 1.28 0.85 0.97 1.2
2016 0.87 0.85 1.05 1.16 0.94
2017 1.47 1.12 1.26 1.19 1.47
Average 1.04 1.01 1.10 1.0 1.14
Source: Secondary Data Analysis (UNComtrade, 2019)
The XCI development of Indonesia's cinnamon export trade for 18 years (2000-2017)
has fluctuated, but tends to increase every year. The average XCI value of Indonesian
cinnamon from 2000-2017 has a value greater than 1, which means that Indonesia's cinnamon
commodity exports have increased from the previous year and can compete in the
international market (Hidayati & Suhartini, 2018). The trend of increasing competitiveness
is in line with developments in the export value and export volume of Indonesian cinnamon,
which also continues to increase every year in the international market. Although Indonesia
is able to compete in the international market, Indonesia's XCI value is not in the highest
position when compared to competing countries. This happens because Indonesia is still
unable to maintain a consistent increase in exporting cinnamon in the international market.
Based on the results of the XCI analysis, the XCI mean value of cinnamon was obtained from
the largest order, namely Madagascar (1.14), Vietnam (1.10), Indonesia (1.04), China (1.01),

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and Sri Lanka (1.00). Madagascar has an XCI average value of more than 1 because the average
export volume growth rate and the export value growth rate of Madagascar cinnamon are
greater than Indonesia, China, Vietnam, and Sri Lanka.
China has an XCI value of (1.01), which means that China's cinnamon exports have
increased from the previous year and are able to compete in the international market.
However, the value of China's XCI when compared to Indonesia, Vietnam and Madagascar
still has very little chance of being competitive. This is because the growth rate of cinnamon
consumption in China also continues to increase every year. In 2008, 2010, and 2012 there
was a drastic decline in export volume due to an increase in domestic cinnamon consumption
in China, namely 35%, 75%, and 45%. This also happened to Sri Lanka, which has an XCI
value of 1, which means that the export of cinnamon in Sri Lanka did not increase and even
decreased from the previous year, so that Sri Lanka was unable to compete in the export of
cinnamon in the international market. This occurs due to a decrease in export volume as a
result of an increase in domestic cinnamon consumption in Sri Lanka by 61% in 2010 and
52% in 2014. An increase in domestic cinnamon consumption in a country can reduce the
country's competitiveness performance if the country does not increase production.
Therefore, China and Sri Lanka must increase production by increasing their productivity in
order to meet domestic needs and needs in the international market which tend to increase.
With changes in the performance of the competitiveness of Indonesian cinnamon and
competing countries from year to year, it is necessary to know what factors affect the
performance of the export competitiveness of Indonesian cinnamon and competing countries
in the international market. The dependent variable used is the export value of cinnamon
from Indonesia and competitors, while the independent variables used are productivity,
market share, export price, and domestic consumption of cinnamon from each country in
Indonesia, and competitors. In panel data regression, the best model is chosen to be used,
namely the common effect, fix effect, or random effect models.
TABLE 3. CHOW TEST RESULTS
Test Summary Prob F Result Decision
Chow 0.0000 H0rejected Fixed Effect
Source: Secondary Data Analysis (2019).
Based on the results of the Chow test in table 3, the probability value F is 0.0000, so
the probability value < α (0.05) and H0 is rejected so that the selected model is a fixed effect
model rather than a common effect model. After it is known that the best model chosen is
the fixed effect model, the next test is carried out, namely the Hausman test.
TABLE 4. HAUSMAN TEST RESULTS
Test Summary Prob Result Decision
Hausman 0.0000 H0rejected Fixed Effect
Source: Secondary Data Analysis (2019).
The Hausman test results obtained a probability value of 0.0000, then the probability
value <α (0.05) and H0 is rejected, so the model chosen is the fixed effect model rather than
the random effect model. The fixed effect model was chosen by using these two approaches,
so testing the model with the Lagrange multiplier can be ignored. Based on the best model
selection test, it can be concluded that a more appropriate model is used to explain the effect

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of productivity, market share, export price, and domestic consumption on the performance
of Indonesia's cinnamon export competitiveness and competitors is the fixed effect model.
Table 5 shows the results of panel data regression with a fixed effect model.
TABLE 5. ANALYSIS RESULTS OF FACTORS AFFECTING THE COMPETITIVENESS PERFORMANCE OF CINNAMON IN INDONESIA AND
MAJOR PRODUCING COUNTRIES IN THE INTERNATIONAL MARKET 2000-2017.
Variable Coefficient Std. Error Prob.
C 6.705086*** 0.471143 0.0000
Ln Productivity 0.556858** 0.214502 0.0112
Ln Market share 1.254767*** 0.092185 0.0000
Ln Export price 1.063756*** 0.074539 0.0000
Ln Domestic consumption -0.051744*** 0.016271 0.0021
R2 0.982789
Adjusted R2 0.981089
Prob (F-statistic) 0.000000
Source: Secondary Data Analysis (2019)
Notes:
*) significant at alpha 90% (α = 0,1)
**) significant at alpha 95% (α=0,05)
***) significant at alpha 99% (α=0,01)
ns
) Non significant
The value of Adjusted R2 shows the accuracy or goodness of fit of the model used. The
greater the R2 value (close to 100 percent), the better the regression model. The estimation
results of panel data regression with fixed effects resulted in an Adjusted R 2 value of 0.9810
which means, 98.10% of the variation in the dependent variable (the export value of the main
cinnamon exporting country on the international market) can be explained by the
independent variables used in the model (productivity, share market, export prices, and
domestic consumption), while the remaining 1.9% is explained by other variables outside the
model that are not included in this study. Based on the results of the panel data regression
analysis of the fixed effect model, the probability value of F is 0.0000, so based on the F test,
productivity, market share, export prices, and domestic consumption together have an effect
on the performance of the competitiveness of cinnamon in the main exporter of cinnamon
in the international market.
Based on the results of panel data regression analysis in Table 5, it can be seen that
the constant value has an effect on the level of 99% with a regression coefficient of 6.7051,
which means that the minimum export value of the main cinnamon producing countries in
the international market when the independent variables in the regression model are
considered fixed or zero is 6.7051% or equal to 816,55 US $.
Productivity
Cinnamon productivity has a positive and significant impact on the export value of
cinnamon in the main cinnamon producing country in the international market. It means
that every one percent increase in the productivity of cinnamon in the main cinnamon
producing country in the international market will increase 0.55% of the export value of

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cinnamon in that country. Productivity is the ability of a land to produce certain crops under
certain land cultivation conditions (Nurmala et al., 2011). Productivity describes the
achievement of targets in the form of crop production related to quality and quantity.
When productivity increases, product availability will also increase. The increase in
productivity explains the increasing number of cinnamon production in certain unit per unit
of land availability for the main cinnamon producing countries in the international market.
The greater the production that can be produced, the more it can meet the availability of
cinnamon to meet domestic and international market needs. The abundance of cinnamon
production in Indonesia, China, Vietnam, Sri Lanka and Madagascar can certainly have an
impact on the progress of cinnamon exports in these countries. The resulting cinnamon
production can support the country to continue to export to meet the demand for cinnamon
in the international market, so that productivity will affect the performance of cinnamon
exports in the international market. Productivity can be used as a yardstick to measure the
effectiveness of cultivation in utilizing the available land. Ashari et al (2015) states that
productivity can have a positive effect on the export performance of Indonesian mangosteen
fruit.
Market Share
The market share of cinnamon has a positive and significant impact on the export
value of cinnamon in the main cinnamon producing countries in the international market,
which means that every one percent increase in the market share of cinnamon in the main
cinnamon producing countries in the international market will increase 1.25% of the export
value of cinnamon in the country. Market share is the total demand for an item in an area
(Widyaningtyas & Widodo, 2016). Market share shows how big the market can be controlled
by the exporting countries in the international market. The greater the market share of a
country means the greater the reach of the market that can be controlled by an exporting
country.
The greater share of the cinnamon market in Indonesia, China, Vietnam, Sri Lanka
and Madagascar shows that these countries can meet the demand for cinnamon in the
international market, thereby increasing the value of their exports. Purnamasari et al (2014)
states that the higher the level of a country's market share, the more competitive it is because
of the larger share of the market that country can control. In addition, it also explains that
the wider market share controlled by an exporting country will enable the industry to maintain
and increase the competitiveness in facing its competitors (Wijayanti et al., 2011).
Export Price
The export price of cinnamon has a positive and significant effect on the export value
of the main cinnamon producing countries in the international market. Every one percent
increase in export price will increase 1.06% of the export value of cinnamon in that country.
This is not in accordance with the research hypothesis which states that export prices will have
a negative effect on the competitiveness performance of the main cinnamon producing
countries in the international market. Gul et al (2013) states that if there is an increase in the

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price of an item, the demand for that item will decrease and consumers will switch to other
goods with a much cheaper price. A decrease in demand in the destination country will
certainly affect the performance of competitiveness, because there will be a decrease in export
volume and export value. However, in this study, the results showed that the higher the price
of cinnamon in Indonesia, China, Vietnam, Sri Lanka and Madagascar, the higher the
competitiveness of those countries. This can happen because the export price or selling price
can describe the quality of a commodity to be exported. Muharami & Novianti (2018) state
that the export price of a good describes the quality of the product to be sold, an increase in
the export price will encourage the export value of a commodity so that it can increase in the
international market followed by an increase in quality. In addition, an increase in the export
price of cinnamon from major producing countries can have a positive effect on the
performance of competitiveness because the largest importer of cinnamon in the world is the
US, which does not have a comparative advantage in producing cinnamon and requires
quality products from exporting countries.
Domestic Consumption
The domestic consumption of cinnamon has a negative effect on the export value of
the main cinnamon producing countries in the international market, which means that every
1 % decrease in the domestic consumption of cinnamon in the main cinnamon producing
countries will increase 0.05 % the export value of cinnamon in that country. The decline in
domestic consumption shows that domestic demand for cinnamon is smaller than foreign
demand, so that the country tends to be an exporter country. Ashari et al (2015) states that
the lower domestic consumption while domestic production continues to increase, a country
will increase its competitiveness because the country will tend to export to the international
market. If domestic consumption in the main cinnamon producing countries increases, these
countries need to increase their production maximally in order to meet the demands of the
domestic market and the international market. Efforts to increase production can be done by
increasing productivity, expanding the area of land and optimizing land, and increasing the
management skills of cinnamon farmers (Sujaya et al., 2018).
Based on the regression analysis of panel data, the main factor affecting the
performance of Indonesia's cinnamon export competitiveness and competing countries is
market share. Market share has the highest coefficient value, which means that this variable
has a greater influence on the export competitiveness performance of the main cinnamon
producing countries. Indonesia and its competitors must continue to increase their share of
the export market for cinnamon in the international market if they are to continue to compete
in the international market. The greater the market share or market reach, the more
competitive the country will be, and that country can get the cinnamon market share in the
international market.

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134 AGRARIS: Journal of Agribusiness
and Rural Development Research

CONCLUSIONS
The performance of Indonesia's cinnamon export trade shows that Indonesia and its
main competitor countries have comparative competitiveness and tend to be the exporters of
cinnamon in the international market. Based on the competitive advantage of Indonesia and
the main competing countries, except Sri Lanka, they have a competitive edge. The factors
that influence the performance of the export competitiveness of Indonesian cinnamon and
competing countries are productivity, market share, export prices, and domestic consumption.
Productivity, market share, and export prices have a positive effect, while domestic
consumption has a negative effect on the export competitiveness performance of Indonesian
cinnamon and its main competitors.

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