PROCESSING AND EXPORTING RAW-MATERIALS - A COMPUTABLE GENERAL EQUILIBRIUM-ANALYSIS OF THE INDONESIAN LOG AND PLYWOOD INDUSTRIES

A computable general equilibrium (CGE) model is constructed for the In donesian economy. The CGE model searches for the optimal log and plywo od export taxes; simulates resource allocation and rates of return to sectoral fixed factors of production under different combinations of e xport taxes and constraints; estimates the welfare costs of reducing l og production or increasing plywood production to a given target; and demonstrates numerically how the hardwood log exporting country should respond to a higher foreign plywood import tariff. Several policy imp lications are drawn and applied to other cases of raw material process ing and trade.