A Panel Data Analysis of Trade Creation and Trade Diversion Effects: The case of ASEAN-China Free Trade Area (ACFTA)
This study uses a theoretically justified gravity model of trade to examine the impact of the ASEAN-China Free Trade Agreement (ACFTA) on exports, focusing on trade creation and diversion effects. The model is tested on a sample of 31 countries over the period dating from 1995 to 2010 using aggregate and disaggregated export data for agricultural raw materials, manufactured goods and chemical products, as well as machinery and transport equipment. In order to obtain unbiased estimates, multilateral resistance terms are included as regressors and the endogeneity bias of the FTA variables is addressed by controlling for the unobserved specific heterogeneity that is specific to each trade flow. The results indicate that ACFTA leads to substantial and significant trade creation. Using disaggregated data, the significant and positive relationship between exports and ACFTA can be confirmed in the case of both manufactured goods and also chemical products.
|Date of creation:||19 Feb 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Platz des Göttinger Sieben 3, 37073 Göttingen|
Phone: 0049-551-39 81 72
Fax: 0049-551-39 81 73
Web page: http://www.iai.wiwi.uni-goettingen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Baier, Scott L. & Bergstrand, Jeffrey H., 2007.
"Do free trade agreements actually increase members' international trade?,"
Journal of International Economics,
Elsevier, vol. 71(1), pages 72-95, March.
- Scott L. Baier & Jeffrey H. Bergstrand, 2005. "Do free trade agreements actually increase members’ international trade?," FRB Atlanta Working Paper 2005-03, Federal Reserve Bank of Atlanta.
- Zhang, Zhaoyong & Ow Chin Hock, 1996. "Trade interdependence and direct foreign investment between ASEAN and China," World Development, Elsevier, vol. 24(1), pages 155-170, January.
- Baldwin, Richard & Taglioni, Daria, 2006.
"Gravity for Dummies and Dummies for Gravity Equations,"
CEPR Discussion Papers
5850, C.E.P.R. Discussion Papers.
- Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
- Soloaga, Isidro & Winters, L. Alan, 1999.
"Regionalism in the Nineties: What Effect on Trade?,"
CEPR Discussion Papers
2183, C.E.P.R. Discussion Papers.
- Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March.
- Filip Abraham & Jan Van Hove, 2005.
"The Rise of China: Prospects of Regional Trade Policy,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(3), pages 486-509, October.
- Filip Abraham & Jan Van Hove, 2005. "The Rise of China: Prospects of Regional Trade Policy," Working Papers Department of Economics ces0506, KU Leuven, Faculty of Economics and Business, Department of Economics.
- Maria Cipollina & Luca Salvatici, 2010.
"The trade impact of European Union agricultural preferences,"
Journal of Economic Policy Reform,
Taylor and Francis Journals, vol. 13(1), pages 87-106.
- Maria Cipollina & Luca Salvatici, 2010. "The trade impact of European Union agricultural preferences," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 13(1), pages 87-106.
- Alan G. Ahearne & John G. Fernald & Prakash Loungani & John W. Schindler, 2006. "Flying geese or sitting ducks: China’s impact on the trading fortunes of other Asian economies," International Finance Discussion Papers 887, Board of Governors of the Federal Reserve System (U.S.).
- Chirathivat, Suthiphand, 2002. "ASEAN-China Free Trade Area: background, implications and future development," Journal of Asian Economics, Elsevier, vol. 13(5), pages 671-686.
- James E. Anderson & Eric van Wincoop, 2001.
"Gravity with Gravitas: A Solution to the Border Puzzle,"
NBER Working Papers
8079, National Bureau of Economic Research, Inc.
- James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
- 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.
- Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February.
- Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
- Fithra Faisal Hastiadi, 2011. "East Asian Regionalism: The Need For Asean+3 Fta," Journal of Global Business and Economics, Global Research Agency, vol. 3(1), pages 31-56, July.
- Magee, Christopher S.P., 2008. "New measures of trade creation and trade diversion," Journal of International Economics, Elsevier, vol. 75(2), pages 349-362, July.
- Antonucci, Daniele & Manzocchi, Stefano, 2006. "Does Turkey have a special trade relation with the EU?: A gravity model approach," Economic Systems, Elsevier, vol. 30(2), pages 157-169, June.
- Felicitas Nowak-Lehmann Danzinger & Dierk Herzer & Inmaculada Martinez-Zarzoso & Sebastian Vollmer, 2005.
"The Impact of a Customs Union between Turkey and the EU on Turkey's Exports to the EU,"
Discussion Papers of DIW Berlin
483, DIW Berlin, German Institute for Economic Research.
- Felicitas Nowak-Lehmann & Dierk Herzer & Inmaculada Martinez-Zarzoso & Sebastian Vollmer, 2007. "The Impact of a Customs Union between Turkey and the EU on Turkey's Exports to the EU," Journal of Common Market Studies, Wiley Blackwell, vol. 45, pages 719-743, 09.
- Martínez-Zarzoso, Inmaculada & Felicitas, Nowak-Lehmann D. & Horsewood, Nicholas, 2009. "Are regional trading agreements beneficial?: Static and dynamic panel gravity models," The North American Journal of Economics and Finance, Elsevier, vol. 20(1), pages 46-65, March.
- Brada, Josef C & Mendez, Jose A, 1985. "Economic Integration among Developed, Developing and Centrally Planned Economies: A Comparative Analysis," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 549-56, November.
- Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
- Estrada, Gemma & Park, Donghyun & Park, Innwon & Park, Soonchan, 2011. "ASEAN’s Free Trade Agreements with the People’s Republic of China, Japan, and the Republic of Korea: A Qualitative and Quantitative Analysis," Working Papers on Regional Economic Integration 75, Asian Development Bank.
- Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
When requesting a correction, please mention this item's handle: RePEc:got:iaidps:224. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Jaep)
If references are entirely missing, you can add them using this form.