The Dynamics of APEC Trade Policy and Its Challenges to National Economic Sovereignty: A Principal Component Analysis Approach

In the era of globalization, regional economic cooperation frameworks such as the Asia-Pacific Economic Cooperation (APEC) have become strategic instruments for developing countries to expand market access and attract foreign investment. However, participation in trade liberalization also poses challenges to national economic sovereignty, particularly in terms of fiscal control, foreign capital dominance, and export dependency. This study aims to identify the principal dimensions of APEC trade policy dynamics and evaluate their impact on Indonesia’s economic sovereignty. The method employed is Principal Component Analysis (PCA) applied to five key variables: APEC tariff rates, Foreign Direct Investment (FDI), export-to-GDP ratio, global competitiveness index, and external debt-to-GDP ratio. The analysis reveals three principal components: (1) liberalization and export dependency (48.2%), (2) foreign capital dominance and fiscal pressure (37.4%), and (3) institutional capacity and national competitiveness (14.4%). PCA biplot visualization indicates that Indonesia and Vietnam have shifted from protectionism toward high integration, albeit with increasing fiscal pressure and external dependency. The United States remains dominant in competitiveness, despite facing a rising debt ratio. This study offers a novel quantitative approach to mapping structural pressures on national economic sovereignty, integrating dependency theory, economic sovereignty, and global competitiveness within the PCA framework. The findings provide a foundation for formulating trade policies that balance openness with national economic autonomy.