Short-Term and Long-Term Performance of Indonesian Handicraft Industry Exports to GDP and its Implications for The Employment in The MSMEs in The Digital Economic Era

Abstract

In the current digital economic era, the export performance of the Indonesian handicraft industry is still fluctuating. It is hoped that the role of exports in Gross Domestic Product will increase the absorption of labor in the Micro, Small and Medium Enterprises sector. Micro, Small, and Medium Enterprises have proven to be resilient in every economic crisis.Research objectives to examine the effect of short-term and long-term performance of Indonesia's Handicraft Industry Exports on Gross Domestic Product and employment of Micro, Small, and Medium Enterprises. The data analysis method used is multiple regression with the Error Correction Model (ECM), in order to obtain the relationship between the independent variable and the dependent variable in the short and long term. The results showed that the export of Indonesia's handicraft industry had a significant and positive effect on Gross Domestic Product both in the short and long term. Gross Domestic Product has a significant and positive effect on employment in the micro and small business sectors in the short and long term. The model test results show that theoretical plausibility according to the estimate, accurate estimates of the parameters, high explanatory ability, and high predictive ability. Thus, positive government policy is needed that can drive exports of the handicraft industry in the short and long term