EAST ASIAN REGIONALISM: THE NEED FOR ASEAN+3 FTA

Fithra Hastiadi

Journal of Global Business and Economics, 2011, vol. 3, issue 1, 31-56

Abstract: For the past few years, regionalism has been progressing in East Asia with the likes of China, Japan, and Korea (CJK) as the most prominent actors. Unfortunately, with the absence of trade arrangement amongst the CJK, the present regional trade scheme is not sufficient to reach sustainability. With the absence of the trade agreements, the present intra regional trade scheme in CJK is not sufficient to meet the target. This paper uncovers the inefficiency of the present scheme through Engle-Granger Cointegration and the Error Correction Mechanism. Moreover, the paper underlines the importance of a triangular trade agreement for accelerating the phase of growth in the region. The paper argues that the spillover effect along with the convergence in terms of trade, Product Complementarities and the nexus between Revealed Comparative Advantage (RCA) with the Intra Industry Trade (IIT) function as economic modalities for creating region-wide FTA. As for this reason, Two Stage Least Squares (2SLS) and static panel fixed effect models are employed. Furthermore, the paper also identifies a number of economic and political factors that can support the formation of East Asian Regionalism.

Keywords: Regionalism; Engle-Granger Cointegration; Error Correction Mechanism; Fixed Effect; Two Stage Least Squares (search for similar items in EconPapers)
JEL-codes: C13 C22 C33 F15 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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