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Assessment the Effect of Free Trade Agreements on Exports of Lao PDR

Author

Listed:
  • Bounlert Vanhnalat

    (Faculty of Economics and Business Management, National University of Laos, Laos,)

  • Phouphet Kyophilavong

    (Faculty of Economics and Business Management, National University of Laos, Laos,)

  • Alay Phonvisay

    (Faculty of Economics and Business Management, National University of Laos, Laos,)

  • Bouason Sengsourivong

    (Faculty of Economics and Business Management, National University of Laos, Laos.)

Abstract

This research paper focuses on estimating the impact of free trade agreements (FTAs) between Lao PDR and 32 trading partners. The panel gravity model has been applied over the period of 1996-2011. The overall findings indicate that the preferential utilization is relatively low and is highly concentrated in natural resource products. Since most exporters have difficulty complying with the various local content requirements, the information of preferential utilization is limited, lack of export diversification and the quality of goods cannot meet the standard requirements. The results of the gravity model suggest that a reduction of import tariffs based on World Trade Organization commitment has strongly supported trade creation, while several FTAs made with major trading partners are a vital factor to support export growth. The findings suggest Lao's exports under preferences and generalized system of preferences (GSP) treatment would increase trade volume on average by 50% more than those partners who neither have FTAs nor GSP.

Suggested Citation

  • Bounlert Vanhnalat & Phouphet Kyophilavong & Alay Phonvisay & Bouason Sengsourivong, 2015. "Assessment the Effect of Free Trade Agreements on Exports of Lao PDR," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 365-376.
    • Handle: RePEc:eco:journ1:2015-02-06
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    References listed on IDEAS

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    5. Xuepeng Liu, 2009. "GATT/WTO Promotes Trade Strongly: Sample Selection and Model Specification," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 428-446, August.
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    8. Indira M. Hapsari & Carlos Mangunsong, 2006. "Determinants of AFTA Members’ Trade Flows and Potential for Trade Diversion," Working Papers 2106, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
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    Cited by:

    1. Salucknai Outtanasith & Khaysy Srithilat, 2022. "The Impact of AFTA on Trade Openness, and Foreign Direct Investment: The Empirical Evidence from Lao PDR," International Journal of Science and Business, IJSAB International, vol. 16(1), pages 142-152.
    2. Phouphet Kyophilavong & Kazunobu Hayakawa, 2024. "Impacts of Trade Liberalization in the Least Developed Countries: Evidence From Lao PDR," The Developing Economies, Institute of Developing Economies, vol. 62(1), pages 45-67, March.
    3. My Duong & Mark J. Holmes & Anna Strutt & Steven Lim, 2019. "Effects of Trade Agreements and Foreign Direct Investment on Trade: Evidence from Vietnam," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 116-126.

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    More about this item

    Keywords

    World Trade Organization; Trade Creation; Gravity Model;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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