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Effects of AFTA on Poverty : Evidence from Laos

Author

Listed:
  • Kyophilavong, Phouphet

    () (National University of Laos)

  • Record, Richard

    () (World Bank)

  • Takamatsu, Shinya

    () (World Bank)

  • Nghardsaysone, Konesawang

    () (World Bank)

  • Sayvaya, Inpaeng

    () (Champasack University)

Abstract

The Association of South-East Asian Nations Free Trade Agreement plays an important role in regional economic development. However, Association of South-East Asian Nations Free Trade Agreement’s contribution to poverty reduction remains unclear. Therefore, the main objective of this study is to assess the impact of Association of South-East Asian Nations Free Trade Agreement on poverty using Laos as a case study. To do so, we apply a Computable General Equilibrium model, microsimulation, and a logit model. Laos benefits from Association of South-East Asian Nations Free Trade Agreement but has also experienced an increase in its trade deficit. The primary benefits from Association of South-East Asian Nations Free Trade Agreement derive from the improvement in trade facilitation and a significant increase in Foreign Direct Investment. Association of South-East Asian Nations Free Trade Agreement may also reduce income inequality at the national level. However, Association of South-East Asian Nations Free Trade Agreement could cause disparities between the so-called winners and losers. The beneficiaries of Association of South-East Asian Nations Free Trade Agreement might be limited to households that have access to land, irrigation, road, and electricity.

Suggested Citation

  • Kyophilavong, Phouphet & Record, Richard & Takamatsu, Shinya & Nghardsaysone, Konesawang & Sayvaya, Inpaeng, 2016. "Effects of AFTA on Poverty : Evidence from Laos," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 31(2), pages 353-376.
  • Handle: RePEc:ris:integr:0688
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    Keywords

    ssociation of South-East Asian Nations; Computable General Equilibrium Model; Laos; Microsimulation;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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