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Regionalism in East Asia: The Way Forward

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  • Fithra Faisal Hastiadi

    () (Department of Economics, Faculty of Economics, Universitas Indonesia)

Abstract

For the past few years, regionalism has been progressing in East Asia with the likes of China, Japan, and Korea (CJK) as the most prominent actors. Unfortunately, with the absence of trade arrangement amongst the CJK, the present regional trade scheme is not sufficient to reach sustainability. This paper uncovers the inefficient scheme through Engle-Granger Cointegration and Error Correction Mechanism. This paper also proves that China’s action to conduct FTA with ASEAN countries will create Baldwin’s domino effect to Japan and Korea. Moreover, the paper underlines the importance of triangular trade agreement for accelerating the phase of growth in CJK which eventually create a spillover effect to East Asia as a whole. Employing Two Stage Least Squares in a static panel fixed effect model, the paper argues that the spillover effect will function as an impetus for creating region-wide FTA. Furthermore, the paper also identifies a number of economic and political factors that can support the formation of East Asian Regionalism.

Suggested Citation

  • Fithra Faisal Hastiadi, 2012. "Regionalism in East Asia: The Way Forward," Working Papers in Economics and Business 201208, Faculty of Economics and Business, University of Indonesia, revised Jul 2012.
  • Handle: RePEc:lpe:wpecbs:201208
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    Cited by:

    1. Fithra Faisal Hastiadi, 2011. "The determinants of east asian regionalism," REVISTA FINANZAS Y POLÍTICA ECONÓMICA, UNIVERSIDAD CATOLICA DE COLOMBIA, December.

    More about this item

    Keywords

    regionalism; engle-granger cointegration; error correction mechanism; fixed effect; two stage least squares;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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