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ECONOMIC ANALYSIS OF ASEAN FREE TRADE AREA; BY A COUNTRY PANEL DATA

Kien Nguyen and Yoshizo Hashimoto
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Yoshizo Hashimoto: Osaka School of International Public Policy, Osaka University

No 05-12, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper is an attempt to use the Hausman-Taylor (HT) estimation to examine the determinants of trade flows of Asean Free Trade Area (AFTA). Based on the two-way error component form of the gravity model, we employ the HT technique to estimate export flows by a country panel data of 39 countries for the period 1988-2002. The estimations have shown the following important results. Firstly, export flows among two countries increase more proportionately with GDPs. More interestingly, trade is higher between countries of identical preferences than those of different ones. Secondly, the most crucial result is that AFTA has only produced the trade creation among its members. Finally, this study suggests the importance of trade facilitation policy to support the targets of FTA.

Keywords: AFTA; gravity models; panel data; trade. (search for similar items in EconPapers)
JEL-codes: F1 F15 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-sea
Date: 2005-05
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