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Economic Analysis Of Asean Free Trade Area; By A Country Panel Data

  • Nguyen Trung Kien

    ()

    (Osaka School of International Public Policy, Osaka University)

  • Yoshizo Hashimoto

    (Osaka School of International Public Policy, Osaka University)

This paper is an attempt to use the Hausman-Taylor (HT) estimation to examine the determinants of trade flows of Asean Free Trade Area (AFTA). Based on the two-way error component form of the gravity model, we employ the HT technique to estimate export flows by a country panel data of 39 countries for the period 1988-2002. The estimations have shown the following important results. Firstly, export flows among two countries increase more proportionately with GDPs. More interestingly, trade is higher between countries of identical preferences than those of different ones. Secondly, the most crucial result is that AFTA has only produced the trade creation among its members. Finally, this study suggests the importance of trade facilitation policy to support the targets of FTA.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0512.pdf
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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 05-12.

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Length: 23 pages
Date of creation: May 2005
Date of revision:
Handle: RePEc:osk:wpaper:0512
Contact details of provider: Web page: http://www.econ.osaka-u.ac.jp/
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  1. I-Hui Cheng & Howard J. Wall, 2004. "Controlling for heterogeneity in gravity models of trade and integration," Working Papers 1999-010, Federal Reserve Bank of St. Louis.
  2. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January.
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  8. 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.
  9. R J R Elliott & K Ikemoto, 2003. "AFTA and the Asian Crisis: Help or Hindrance to ASEAN Intra-Regional Trade?," The School of Economics Discussion Paper Series 0311, Economics, The University of Manchester.
  10. 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.
  11. Paul Krugman, 1989. "Is Bilateralism Bad?," NBER Working Papers 2972, National Bureau of Economic Research, Inc.
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