Preferential Trade Agreements in Asia: Alternative Scenarios of "Hub and Spoke"

Fan Zhai

No 83, ADB Economics Working Paper Series from Asian Development Bank

Abstract: The proliferation of preferential trade agreements in Asia may result in a number of hub-and-spoke configurations, with the Association of Southeast Asian Nations, People's Republic of China, and Japan competing as regional hubs of bilateral free trade areas. Using a newly developed global computable general equilibrium model with imperfect competition, increasing returns to scale, and heterogeneous firms, the paper explores the potential economic effects of alternative hub-and-spoke configurations in Asia. Simulation results suggest that the regionalism approach to integration in the Asian context can hardly act as a building block of global trade liberalization, if it is confined to shallow integration only. However, regional trade agreements involving deep integration measures provide a promising path toward global free trade.

Keywords: preferential trade agreements; Asia; hub-and-spoke configurations; global trade liberalization; computable general equilibrium model (search for similar items in EconPapers)
JEL-codes: F12 F15 F17 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2006-10-01
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Working Paper: Preferential Trade Agreements in Asia: Alternative Scenarios of "Hub and Spoke" (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0083

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