The impact of regional trade agreements on trade efficiency in East Asia: a stochastic frontier gravity approach

Haoliang Zhu

Applied Economics Letters, 2024, vol. 31, issue 18, 1767-1772

Abstract: This paper aims to investigate how selected regional trade agreements (RTAs) affect trade efficiency in East Asia, which is measured by the ratio of actual exports to their maximum potential export value. To achieve this, we use a stochastic frontier gravity model and bilateral trade data of 16 countries from 1990 to 2018. Our results indicate that RTAs generally improve trade efficiency between member countries. Moreover, we distinguish between intra-bloc and extra-bloc trade, and found that export diversion due to RTAs is rare in East Asia. On the other hand, our result shows that the imports of ASEAN countries tend to divert away from non-members.

Date: 2024
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DOI: 10.1080/13504851.2023.2206612

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