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Evaluating Asian FTAs: What do Gravity Equation Models Tell Us?

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Listed:
  • Sunder Ramaswamy
  • Abishek Choutagunta
  • Santhosh K. Sahu

Abstract

This research evaluates the performance of free trade agreements by analyzing the determinants of trade flows of Asian economies for a panel of thirty-one countries during 2007-2014 using a Gravity model. The estimated results suggest that certain Free Trade Agreements (FTAs) negatively contribute to trade flows across the region and that GDP and population, among other factors, can explain the total trade flows. The study also finds that trade costs which uses distance as a proxy, has a significant and negative effect on trade. The results are in-line with the expectations which can be drawn by looking at trends of trade flows in Asia and thus, a case is made for smoothening trade-flows across the region by reducing tariff and non-tariff barriers; pumping in investments on transport infrastructure, and improving productivity of the partners as a whole which has positive effects on GDP and thus trade. [WORKING PAPER 152/2016]

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  • Sunder Ramaswamy & Abishek Choutagunta & Santhosh K. Sahu, 2016. "Evaluating Asian FTAs: What do Gravity Equation Models Tell Us?," Working Papers id:11377, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11377
    Note: Institutional Papers
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    References listed on IDEAS

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    Cited by:

    1. Sahar Hassan Khayat & Samiha Hassan Khayyat, 2018. "Cross-Border Portfolio Investment from Developing Economies and Top Major Partners, Using the Gravity Model," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(11), pages 137-137, November.

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    More about this item

    Keywords

    International Trade Flows; Gravity Model; Asia; PPM; Asian; FTAs; tariff; productivity; investments on transport infrastructure; GDP; trade; India; China; financial crisis;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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