Growth of Asian Regional Trade and Income Convergence: Evidence from ASEAN+3 Based on Extended Helpman-Krugman Hypothesis and Flexible Modelling Approach

Tran Van Hoa
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Tran Van Hoa: University of Wollongong, http://business.uow.edu.au/econ/who/index.html
Authors registered in the RePEc Author Service: Van Hoa Tran () and Van Hoa Tran

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: In earlier cross-sectional gravity-theory reports (see for example Frankel and Romer, 1999), empirical modelling evidence lends support to the hypothesis of ‘trade causes growth’. In our time-series study on trade-growth causation for a new Asian regionalism (namely ASEAN+3), the hypothesis was also confirmed (Tran Van Hoa, 2002c). A number of benchmark models have also been proposed to find out what causes trade (for a brief survey, see Baier and Bergstrand, 2001), but specific research on income convergence and Asian or more specifically ASEAN+3 trade is still scarce or even non-existent. The paper focuses on studying the growth of ASEAN+3 bilateral trade in the volatile period 1968-2000 and, using an extended Helpman-Krugman (1985) function-free model and World Bank national account and CHELEM trade data, tests the impact of convergence on this trade. Surprisingly, this convergence is found plausible but statistically insignificant and ASEAN output growth and crises are principal determinants of the trade flows between the East Asia 3 and ASEAN.

Keywords: New Asian Regionalism; Free Trade Agreement; ASEAN; ASEAN+3; Trade and Growth; Crises; Convergence Theory; Gravity Theory; Causality; Economic Modelling; Estimation Methods; Economic and Trade Policy (search for similar items in EconPapers)
JEL-codes: C32 C51 C52 F02 F14 F15 F42 O11 O41 O53 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2003
New Economics Papers: this item is included in nep-dev and nep-sea
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Citations: View citations in EconPapers (2)

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