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ASEAN in a regional perspective

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Author Info

  • Jeffrey Frankel
  • Shang-Jin Wei

Abstract

There are two striking conventional wisdoms about the status of regional trading blocs in East Asia. The first is that the only formal regional arrangement in the area, ASEAN, does not in fact function as an economic bloc. Trade among the members is thought to be very low. The second is that East Asia taken as a whole does function as a trading and investment bloc, under Japanese direction, and increasingly so over time. This despite the absence of any formal preferential trading area among these countries. This characterization of East Asian trading patterns is not entirely correct. ; Trade among the ASEAN economies is in fact higher than one would expect, based on their income levels and other important determinants of bilateral trade. The same is true of trade within East Asia more broadly (or trade within an ASEAN-Australia-New Zealand grouping). To the extent that this regional concentration of trade is attributed to formal or informal regional trading arrangements, they appear to be trade-creating, not trade-diverting. ; The gravity model of bilateral trade used in this study implies that trade among Southeast Asian countries will in the future continue to grow more rapidly than incomes. Our model thereby implies that trade among ASEAN countries will grow at about 12 percent a year faster than the world average, which is 16 percent. If plans for AFTA are realized in a meaningful way, than intra-ASEAN trade should increase much more rapidly.

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Bibliographic Info

Paper provided by Federal Reserve Bank of San Francisco in its series Pacific Basin Working Paper Series with number 96-02.

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Date of creation: 1996
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Handle: RePEc:fip:fedfpb:96-02

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Keywords: ASEAN ; Free trade ; Asia ; East Asia ; International trade;

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Cited by:
  1. Miriam Manchin & Annette O. Pelkmans-Balaoing, 2007. "Clothes without an Emperor: Analysis of the Preferential Tariffs in ASEAN," Development Working Papers 223, Centro Studi Luca d\'Agliano, University of Milano.
  2. Marián Dinga & Vilma Dingová, 2011. "Currency Union and Investment Flows: Estimating the Euro Effect on FDI," Working Papers IES 2011/25, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2011.
  3. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc.
  4. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
  5. Ghosh, Sucharita & Yamarik, Steven, 2004. "Are regional trading arrangements trade creating?: An application of extreme bounds analysis," Journal of International Economics, Elsevier, vol. 63(2), pages 369-395, July.
  6. Agnès Bénassy-Quéré & Amina Lahrèche-Revil, 2003. "Trade Linkages and Exchange Rates in Asia: The Role of China," Working Papers 2003-21, CEPII research center.
  7. Diaz-Bautista, Alejandro, 2002. "The role of telecommunications infrastructure and human capital: Mexico´s economic growth and convergence," ERSA conference papers ersa02p102, European Regional Science Association.
  8. Carrere, Celine & Schiff, Maurice, 2004. "On the geography of trade : distance is alive and well," Policy Research Working Paper Series 3206, The World Bank.
  9. Diwan, Ishac & Hoekman, Bernard, 1999. "Competition, Complementarity and Contagion in East Asia," CEPR Discussion Papers 2112, C.E.P.R. Discussion Papers.
  10. Yin-Wong Cheung & Xingwang Qian, 2009. "The Empirics of China's Outward Direct Investment," CESifo Working Paper Series 2621, CESifo Group Munich.
  11. Stacie Beck & Alexis Chaves, 2011. "The Impacts of Various Taxes on Foreign Direct Investment," Working Papers 11-18, University of Delaware, Department of Economics.
  12. Amina Lahrèche-Révil & Juliette Milgram, 2006. "Exchange-rate policies and trade in the MENA countries," ThE Papers 06/07, Department of Economic Theory and Economic History of the University of Granada..
  13. Foroutan, Faezeh, 1998. "Does membership in a regional preferential trade arrangement make a country more or less protectionist?," Policy Research Working Paper Series 1898, The World Bank.
  14. Timothy Bond, 1998. "Capital Flows to Asia: The Role of Monetary Policy," Empirica, Springer, vol. 25(2), pages 165-182, January.
  15. Norman Loayza & Humberto Lopez & Angel Ubide, 1999. "Comovement and Macroeconomic Interdependence: Evidence for Latin America, East Asia, and Europe," Working Papers Central Bank of Chile 60, Central Bank of Chile.

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