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

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  • Nguyen Trung Kien

    () (Osaka School of International Public Policy, Osaka University)

  • Yoshizo Hashimoto

    (Osaka School of International Public Policy, Osaka University)

Abstract

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.

Suggested Citation

  • Nguyen Trung Kien & Yoshizo Hashimoto, 2005. "Economic Analysis Of Asean Free Trade Area; By A Country Panel Data," Discussion Papers in Economics and Business 05-12, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    • Handle: RePEc:osk:wpaper:0512
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0512.pdf
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    1. 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 474-481, August.
    2. Robert J. R. Elliott & Kengo Ikemoto, 2004. "AFTA and the Asian Crisis: Help or Hindrance to ASEAN Intra-Regional Trade?," Asian Economic Journal, East Asian Economic Association, vol. 18(1), pages 1-23, March.
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    6. 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 143-153, February.
    7. Endoh, Masahiro, 1999. "The transition of postwar Asia-Pacific trade relations," Journal of Asian Economics, Elsevier, vol. 10(4), pages 571-589.
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    9. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January.
    10. Paul Krugman, 1989. "Is Bilateralism Bad?," NBER Working Papers 2972, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Trotignon, Jérôme, 2010. "La Restriction des émissions de CO2 pénalise-t-elle les exportations? Un modèle de gravité avec données de panel et variables muettes régionales," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(1), pages 5-33, mars.
    2. Norehan Abdullah & Hussin Abdullah & Hadi M. Othman Abuhriba, 2014. "The Determinants of Trade and Trade Direction of Arab Maghreb Union (AMU)," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 2(2), pages 46-62.
    3. Piriya Pholphirul, 2010. "Does AFTA Create More Trade for Thailand? An Investigation of Some Key Trade Indicators," Journal of Current Southeast Asian Affairs, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 29(1), pages 51-78.
    4. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(4), pages 421-473.
    5. Jérôme Trotignon, 2010. "La restriction des émissions de CO2 pénalise-t-elle les exportations ? Un modèle de gravité avec données de panel et variables muettes régionales," Post-Print halshs-00477244, HAL.
    6. Miran, Bülent & Atiş, Ela & Bektaȿ, Zerrin & Salalı, Ece & Cankurt, Murat, 2013. "An Analysis of International Raisin Trade: A Gravity Model Approach," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152200, Australian Agricultural and Resource Economics Society.

    More about this item

    Keywords

    AFTA; gravity models; panel data; trade.;

    JEL classification:

    • F1 - International Economics - - Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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