Unlocking Export Potential: Technical Efficiency of Indonesia’s Cocoa Butter Trade Using Stochastic Frontier Gravity Model

Abstract

Indonesia is a major cocoa butter exporter that faces global market barriers and export inefficiencies, yet research on the technical efficiency of its trade remains limited. This study applies a Stochastic Frontier Gravity Model for the period 2015–2024 to examine the determinants and trade efficiency of Indonesia’s cocoa butter exports. The analysis is conducted separately for developed and developing destination countries. The estimation results show that the exporter’s gross domestic product (GDP) and the economic distance between the 2 countries have a statistically significant positive effect on the value of cocoa butter exports. Meanwhile, the importer’s GDP has a statistically significant negative effect, consistent with the structural characteristics of an intermediate-goods market that is highly dependent on the presence of processing hubs. The real exchange rate of the Indonesian rupiah and the technical barriers to trade (TBT) coverage ratio are associated with lower trade inefficiency in both country groups. Among developed countries, the United States recorded the highest average technical efficiency over the past decade, while South Korea had the lowest. Among developing countries, India achieved the highest average efficiency, while other countries had substantially lower average technical-efficiency scores. These findings suggest that TBT measures may facilitate trade for exporters that comply with the relevant standards and that expansion strategies should prioritize countries with strong chocolate-processing industry clusters.

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