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East Asian Regionalism: The Need For Asean+3 Fta

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Author Info

  • Fithra Faisal Hastiadi

    (Graduate School of Asia-Pacific Studies (GSAPS), Waseda University, Tokyo, Japan)

Abstract

For the past few years, regionalism has been progressing in East Asia with the likes of China, Japan, and Korea (CJK) as the most prominent actors. Unfortunately, with the absence of trade arrangement amongst the CJK, the present regional trade scheme is not sufficient to reach sustainability. With the absence of the trade agreements, the present intra regional trade scheme in CJK is not sufficient to meet the target. This paper uncovers the inefficiency of the present scheme through Engle-Granger Cointegration and the Error Correction Mechanism. Moreover, the paper underlines the importance of a triangular trade agreement for accelerating the phase of growth in the region. The paper argues that the spillover effect along with the convergence in terms of trade, Product Complementarities and the nexus between Revealed Comparative Advantage (RCA) with the Intra Industry Trade (IIT) function as economic modalities for creating region-wide FTA. As for this reason, Two Stage Least Squares (2SLS) and static panel fixed effect models are employed. Furthermore, the paper also identifies a number of economic and political factors that can support the formation of East Asian Regionalism.

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Bibliographic Info

Article provided by Global Research Agency in its journal Journal of Global Business and Economics.

Volume (Year): 3 (2011)
Issue (Month): 1 (July)
Pages: 31-56

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Handle: RePEc:grg:01biss:v:3:y:2011:i:1:p:31-56

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Web page: http://www.globalresearch.com.my/journal.htm

Related research

Keywords: Regionalism; Engle-Granger Cointegration; Error Correction Mechanism; Fixed Effect; Two Stage Least Squares;

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References

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  1. Tamura, R., 1992. "Regional Economies and Market Integration," Working Papers 92-24, University of Iowa, Department of Economics.
  2. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
  3. Kawai, Masahiro, 2005. "East Asian economic regionalism: progress and challenges," Journal of Asian Economics, Elsevier, vol. 16(1), pages 29-55, February.
  4. Summers, Robert & Heston, Alan, 1988. "A New Set of International Comparisons of Real Product and Price Levels Estimates for 130 Countries, 1950-1985," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(1), pages 1-25, March.
  5. Kawai, Masahiro & Wignaraja, Ganeshan, 2008. "Regionalism as an Engine of Multilateralism: A Case for a Single East Asian FTA," Working Papers on Regional Economic Integration 14, Asian Development Bank.
  6. Horácio Faustino, 2008. "Intra-Industry Trade and Revealed Comparative Advantage: An Inverted-U Relationship," Working Papers Department of Economics 2008/03, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  7. Harvie, Charles & Lee, Hyun-Hoon, 2002. "New Regionalism in East Asia: How Does It Relate to the East Asian Economic Development Model?," Economics Working Papers wp02-10, School of Economics, University of Wollongong, NSW, Australia.
  8. Oxley, Les & Greasley, David, 1995. "A Time-Series Perspective on Convergence: Australia, UK and USA since 1870," The Economic Record, The Economic Society of Australia, vol. 71(214), pages 259-70, September.
  9. Arellano, Manuel, 1993. "On the testing of correlated effects with panel data," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 87-97, September.
  10. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  11. David Greenaway & Robert Hine & Chris Milner, 1994. "Country-specific factors and the pattern of horizontal and vertical intra-industry trade in the UK," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(1), pages 77-100, March.
  12. Shujiro Urata & Kozo Kiyota, 2005. "The Impacts of an East Asia Free Trade Agreement on Foreign Trade in East Asia," NBER Chapters, in: International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14, pages 217-252 National Bureau of Economic Research, Inc.
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Cited by:
  1. Shanping Yang & Inmaculada Martínez-Zarzoso, 2013. "A Panel Data Analysis of Trade Creation and Trade Diversion Effects: The case of ASEAN-China Free Trade Area (ACFTA)," Ibero America Institute for Econ. Research (IAI) Discussion Papers 224, Ibero-America Institute for Economic Research.

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