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Does AFTA Create More Trade for Thailand? An Investigation of Some Key Trade Indicators

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  • Piriya Pholphirul

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Abstract

This paper examines whether the ASEAN Free Trade Agreement (AFTA) creates trade for Thailand or actually diverts it away from the country. It does this by analyzing various trade indicators: the Export Similarity Index, the Intra-Industry Trade Index, and Revealed Comparative Advantage (RCA) rank correlation. By examining the patterns of trade between Thailand and other members of ASEAN, it reveals a high degree of similarity regarding the trade structure between Thailand and AFTA, which indicates that there will be fewer trade-creation benefits from AFTA and a greater likelihood of trade diversion once the AFTA scheme has been fully implemented. This similarity pattern explains the reasons for future collaboration among member countries and supportive arguments for the future extension of ASEAN ("ASEAN+"). Market-penetration and development strategies should be employed by Thai exporters when accessing the ASEAN market.

Suggested Citation

  • Piriya Pholphirul, 2010. "Does AFTA Create More Trade for Thailand? An Investigation of Some Key Trade Indicators," Journal of Current Southeast Asian Affairs, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 29(1), pages 51-78.
  • Handle: RePEc:gig:soaktu:v:29:y:2010:i:1:p:51-78
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    File URL: http://hup.sub.uni-hamburg.de/giga/jsaa/article/view/209
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    References listed on IDEAS

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    1. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, pages 98-114.
    2. Robert J. R. Elliott & Kengo Ikemoto, 2004. "AFTA and the Asian Crisis: Help or Hindrance to ASEAN Intra-Regional Trade?," Asian Economic Journal, East Asian Economic Association, vol. 18(1), pages 1-23, March.
    3. Jeffrey Frankel & Miles Kahler, 1993. "Regionalism and Rivalry: Japan and the United States in Pacific Asia," NBER Books, National Bureau of Economic Research, Inc, number fran93-1.
    4. Jeffrey A. Frankel & Miles Kahler, 1993. "Introduction to "Regionalism and Rivalry: Japan and the United States in Pacific Asia"," NBER Chapters,in: Regionalism and Rivalry: Japan and the United States in Pacific Asia, pages 1-18 National Bureau of Economic Research, Inc.
    5. Nguyen Trung Kien & Yoshizo Hashimoto, 2005. "Economic Analysis Of Asean Free Trade Area; By A Country Panel Data," Discussion Papers in Economics and Business 05-12, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    6. Anne O. Krueger, 1999. "Trade Creation and Trade Diversion Under NAFTA," NBER Working Papers 7429, National Bureau of Economic Research, Inc.
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