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Has Trade Intensity in ASEAN+3 Really Increased? Evidence from a Gravity Analysis

Author

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  • Heungchong Kim

    (KIEP - Korea Institute for International Economic Policy)

Abstract

This study examines the observable phenomenon of growing trade intensity among the ASEAN+3 countries over the last twenty years by using standard gravity approach. While there is a conventional belief that trade intensities within CJK (China Japan and Korea) and between CJK and ASEAN have increased, we cannot find proper evidence that the relations have intensified over time beyond the gravity residuals. Moreover, with the exclusion of Hong Kong, the fitted trade flows projected by the gravity equation can explain most of the actual flows within CJK. With respect to the trade relations between CJK and ASEAN, substantial time-serial fluctuations in trade intensity disappear if the two entrepots of Hong Kong and Singapore are excluded. A test for any special trade relations between each CJK country and ASEAN reveals that the widely known close trade relations between Japan and ASEAN are mostly explained by the gravity factors even in the heyday of the Japanese yen bloc, but that the Chinese connection which the gravity regression cannot explain, may exist in trade with ASEAN. It is also revealed that recent developments in trade between Korea and ASEAN are growing increasingly distant from the realm of the gravity explanation.

Suggested Citation

  • Heungchong Kim, 2002. "Has Trade Intensity in ASEAN+3 Really Increased? Evidence from a Gravity Analysis," Trade Working Papers 21766, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:tradew:21766
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    File URL: http://www.eaber.org/node/21766
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    More about this item

    Keywords

    Gravity Model; Bilateral Trade; ASEAN+3;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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