The Determinants of Modest Fashion Exports to OIC Countries: Evidence from Indonesia

This paper aims to explore the export opportunity of modest fashion to member countries of the Organization of Islamic Cooperation (OIC) and suggest somepolicy recommendations for OIC members to enhance intra-OIC modest fashion trade. By developing the gravity model, this study empirically estimatesthe determinants of modest fashion exports to 23 OIC countries from 2003 to 2019. It adopts a correlated panel corrected standard errors regression data panelanalysis to overcome autocorrelation symptoms. Exporters' and importers' GDP, distance, exchange rate, population, trade openness of trading partners,FTA, ethnicity, and D-8 membership affect exports to OIC countries. However, the entry time factor of trading partners does not. Indonesia's modest fashionexports to OIC countries that have implemented FTAs with Indonesia are 165 percent higher than those that have not. Additionally, ethnicity and D-8membership positively affect modest fashion exports to OIC countries. The paper only employs 23 out of 57 OIC countries due to data limitations. Thistrade policy allows a country to market its modest fashion products globally. This study contributes to the applicability of the gravity model to the modestfashion trade in OIC countries. It extends the model with additional controls for behavioral aspects of cultural or ethnic issues in the modest fashion trade. Thefindings underscore the need to extend the theory beyond its current focus when explaining trade opportunities in the modest fashion industry.