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The Impact of ACFTA on People’s Republic of China–ASEAN Trade: Estimates Based on an Extended Gravity Model for Component Trade

Author

Listed:
  • Sheng, Yu

    () (The Australian National University)

  • Tang, Hsiao Chink

    () (Asian Development Bank)

  • Xu, Xinpeng

    () (The Hong Kong Polytechnic University)

Abstract

This paper uses an extended gravity model to shed light on the impact of the free trade area agreement between the Association of Southeast Asian Nations (ASEAN) and the People's Republic of China (PRC) on the members' trade flows and trade patterns. New determinants that capture the rising importance of global production sharing and intraregional trade in parts and components in East Asia are proposed. Results from the extended gravity model show that the free trade agreement leads to substantially higher bilateral trade between ASEAN and the PRC, more than what a conventional gravity model predicts. The increase is concentrated in the ASEAN countries with stronger industrial linkages with the PRC.

Suggested Citation

  • Sheng, Yu & Tang, Hsiao Chink & Xu, Xinpeng, 2012. "The Impact of ACFTA on People’s Republic of China–ASEAN Trade: Estimates Based on an Extended Gravity Model for Component Trade," Working Papers on Regional Economic Integration 99, Asian Development Bank.
  • Handle: RePEc:ris:adbrei:0099
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    Citations

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    Cited by:

    1. Schaak, Henning, 2015. "The Impact of Free Trade Agreements on International Agricultural Trade: A Gravity Application on the Dairy Product Trade and the ASEAN-China-FTA," 55th Annual Conference, Giessen, Germany, September 23-25, 2015 211619, German Association of Agricultural Economists (GEWISOLA).
    2. Yang, Shanping & Martinez-Zarzoso, Inmaculada, 2014. "A panel data analysis of trade creation and trade diversion effects: The case of ASEAN–China Free Trade Area," China Economic Review, Elsevier, vol. 29(C), pages 138-151.
    3. Misa OKABE, 2015. "Impact of Free Trade Agreements on Trade in East Asia," Working Papers DP-2015-01, Economic Research Institute for ASEAN and East Asia (ERIA).

    More about this item

    Keywords

    ACFTA; gravity model; parts and components trade;

    JEL classification:

    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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