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Potential Impacts Of Regional Trade Enlargement In East Asia On Laos' Trade

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  • SITHANONXAY SUVANNAPHAKDY

    () (Hiroshima Shudo University, Japan)

  • CHRIS CZERKAWASKI

    (Hiroshima Shudo University, Japan)

  • TOSHIHISA TOYODA

    (Hiroshima Shudo University, Japan)

Abstract

Using an unbalanced panel dataset of bilateral trade flows from 1992-2009, we assess the potential impacts of the formation of ASEAN+3 and ASEAN+6 free trade areas (FTAs) on Laos' trade. We find that bilateral trade flows between Laos and its trade partners are positively related to the sum of bilateral gross domestic product (GDP) and the degree of similarity in GDP size between Laos and the partner, and inversely related to relative factor endowment differences, transportation costs, and import tariff rates. Our simulation results show that Laos stands to gain from the formation of ASEAN+3 and ASEAN+6 FTAs if tariff barriers are gradually decreased. However, such examples of regional integration could harm Laos' economy if all tariff barriers were completely removed due to Laos' lack of competitiveness.

Suggested Citation

  • Sithanonxay Suvannaphakdy & Chris Czerkawaski & Toshihisa Toyoda, 2013. "Potential Impacts Of Regional Trade Enlargement In East Asia On Laos' Trade," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(3), pages 85-110, September.
  • Handle: RePEc:jed:journl:v:38:y:2013:i:3:p:85-110
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    Keywords

    East Asia; Trade Flow; Gravity Model; Laos;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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