Asian Economic Journal · 2004 · 156 citations · 46 references
Social SciencesEconomicsInternational EconomicsInternational TradeInternational Trade PolicyAsian EconomiesEffect On TradeInterregional TradeTrade GeographyTrade LiberalizationGravity Model Of TradeInternational Trade FlowsInterregional Trade FlowsMarket OpennessModified Gravity TheoriesTrade Flows Analysis
The study uses a modified gravity model to examine how ASEAN intra‑ and extra‑regional trade biases have evolved over time. The authors analyze trade flows before and after AFTA and the Asian crisis, comparing intra‑ASEAN and non‑member trade to assess AFTA’s impact. The analysis finds that AFTA had little immediate effect on trade flows, while the Asian crisis strengthened intra‑ASEAN sourcing and reinforced ASEAN’s outward‑oriented stance.
Using a modified gravity equation, this paper examines ASEAN intra‐ and extra‐regional bias in bilateral trade flows and how these relationships have altered over time. We pay particular attention to the periods before and after the signing of AFTA as well as the crucial years prior to and following the Asian crisis. Given the ‘openness’ of ASEAN countries we consider not only intra‐ASEAN trade but also the effect of AFTA on non‐members. We find that trade flows were not significantly affected in the years immediately following the signing of the AFTA agreement and also that the traditional stance of ASEAN countries to outward‐oriented economic activity has not been significantly damaged but rather stimulated by the AFTA process and/or the Asian economic crisis. We do find, however, that that one effect of the Asian economic crisis was to generate a stronger desire to source imports from within the region.
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A Theoretical Foundation for the Gravity Equation.
James E. Anderson · American Economic Review · 1979 · 3.5K citations