Does trade among ASEAN members promote efficiency? sectoral evidence from the gravity model

Mohd Amin, Ruzita and Hamid, Zarinah and Md Saad, Norma (2011) Does trade among ASEAN members promote efficiency? sectoral evidence from the gravity model. International Journal of Humanities and Social Science, 1 (12). pp. 236-253. ISSN 2221-0989 (O), 2220-8488 (P)

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Abstract

This study investigates whether intra-ASEAN trade represents higher trade with efficient members (trade creating) or with inefficient members (trade diverting). Since ASEAN integration efforts are geared toward “open regionalism”, factors affecting both inter-industry and intra-industry trade at the disaggregated level are also identified. Using the extended gravity model, intra-ASEAN trade with efficient members is found for total exports, mainly contributed by five sectors: beverages & tobacco, minerals & fuels, chemicals & materials, machinery & transport equipment, and miscellaneous manufactures. Thus, this study finds that only „good‟, i.e., efficient intra-regional trade is taking place within ASEAN, which is in line with the objective of establishing the ASEAN Economic Community. Income levels, transportation costs as well as level of development are shown to have a significant effect on total trade as well as on most sectors. Based on the findings, the study provides policy recommendations to promote higher trade for ASEAN members.

Item Type:	Article (Journal)
Additional Information:	544/3262
Uncontrolled Keywords:	Economic integration, Gravity model, ASEAN, Efficiency, Sectoral analysis
Subjects:	H Social Sciences > HF Commerce > HF3000 By region or country
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Dr. Zarinah Hamid
Date Deposited:	26 Sep 2011 15:23
Last Modified:	24 Oct 2011 14:33
URI:	http://irep.iium.edu.my/id/eprint/3262

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