Determinants of AFTA Members’ Trade Flows and Potential for Trade Diversion

Indira Maulani Hapsari · Carlos Mangunsong

29 citations0/0 files storedRePEc: Research Papers in Economics

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Global trade and economics Global Political and Economic Relations Global Trade and Competitiveness

Abstract

The objective of this paper is to investigate the determinants of trade flows of AFTA members, including the impact of creation of AFTA on its intraregional and extra-regional trade flow by comparing trade patterns of AFTA countries with AFTA members and non-members. By doing so, we hope to be able to reveal whether AFTA (i) increases trade among members; (ii) adversely impact non-member countries; and (iii) contributes to or undermines further liberalization of AFTA members. This analysis is limited to ASEAN 5 (Indonesia, Malaysia, Singapore, Philippines and Thailand) and several non-ASEAN member countries to assess the AFTA membership effects. Using several indicators, namely ‘complementarity index’ and ‘similarity index’, this study examines whether bilateral trade between economies has been complementary in nature or, on the contrary, similar and thus increased competition so that each countries need to increase their competitiveness.

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References

2011Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?1999Trade Creation and Trade Diversion Under NAFTA 2003Major Trade Trends in East Asia: What are their Implications for Regional Cooperation and Growth?2004AFTA and the Asian Crisis: Help or Hindrance to ASEAN Intra‐Regional Trade?2002Do We Really Know that the WTO Increases Trade?2005ECONOMIC ANALYSIS OF ASEAN FREE TRADE AREA; BY A COUNTRY PANEL DATA

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