Counter-trade and development: A case study of counter-trade between Indonesia and Vietnam during the 1990s

This paper examines some facets of the growth of counter-trade as undertaken during the 1990s between Indonesia and Vietnam as an instrument to facilitate economic growth through an enhanced export trade, enabling the acquisition of vital growth-underpinning imports by circumventing the hard constraints imposed by their limited foreign exchange reserves. After a review of the economic theory relating to counter-trade and estimates of counter-trade worldwide, the paper examines key aspects of typical counter-trade transactions between the two countries: rice from Vietnam for urea-fertiliser from Indonesia. Finally some views are expressed about the possible evolution of counter-trade between Indonesia and Vietnam.