Evaluating Asian Free Trade Agreements: What Does Gravity Model Tell Us?

2020 ◽  
Vol 56 (1) ◽  
pp. 60-70
Author(s):  
Sunder Ramaswamy ◽  
Abishek Choutagunta ◽  
Santosh Kumar Sahu
Keyword(s):  
Gravity Model ◽  
Free Trade ◽  
Free Trade Agreements ◽  
Trade Agreements ◽  
Trade Flows ◽  
Transport Infrastructure ◽  
Total Trade ◽  
Jel Codes ◽  
Positive Effects ◽  
Negative Effect

This paper evaluates the performance of Free Trade Agreements (FTAs) by analysing the determinants of trade flows of Asian economies for a panel of 31 countries during 2007–2014 using a Gravity model. The estimated results suggest that certain FTAs negatively contribute to trade flows across the region and, that GDP and population, among other factors, can explain total trade flows. This study also finds that trade costs using distance as a proxy has a significant and negative effect on trade. Our results are in-line with the expectations which can be drawn by looking at trends of trade flows in Asia. Thus, a case is attempted for smoothening trade-flows across the region by reducing tariff and non-tariff barriers, pumping in investments on transport infrastructure and improving productivity of the partners as a whole which has positive effects on GDP and thus trade. JEL Codes: F13, F14, C23

scholarly journals Determinants of Trade Flows between Colombia and South Korea

2020 ◽  
Vol 39 (70) ◽  
Author(s):  
Sandra Daniela Ariza Marin
Keyword(s):  
Panel Data ◽  
South Korea ◽  
Gravity Model ◽  
Free Trade ◽  
Bilateral Trade ◽  
Free Trade Agreements ◽  
Trade Agreements ◽  
Asian Country ◽  
Trade Flows ◽  
Industrial Products

  This paper identifies the determinants of trade flows between Colombia and South Korea. For this purpose, the economic and commercial profile for both countries, bilateral trade and the signed FTA were analyzed. Likewise, a gravity model for total and sectorial trade with panel data for the period of 1993-2013 is applied, finding consistencies with the theoretical postulates. Variables such as income of the importer and exporter countries determine positive and significant bilateral trade, while the distance and landlocked decrease the likelihood of trade. Furthermore, the results of the gravity model indicate that the free trade agreements have no significant impact on trade of South Korea; however, from the analysis of the agreement it is considered that Colombian agricultural and agro-industrial products have potential opportunities to compete in the Asian country.

scholarly journals LA INSERCIÓN COMERCIAL DE CHINA EN LATINOAMÉRICA

2019 ◽  
Vol 78 (310) ◽  
pp. 137
Author(s):  
Jorge Alberto López Arévalo ◽  
Óscar Rodil Marzábal
Keyword(s):  
Costa Rica ◽  
Free Trade ◽  
Fixed Effects ◽  
Bilateral Trade ◽  
Free Trade Agreements ◽  
Trade Agreements ◽  
Trade Integration ◽  
Negative Effect ◽  
The Difference ◽  
Positive Effect

<p>Este trabajo estudia los intercambios bilaterales de China con México, Chile, Costa Rica y Perú desde la óptica del comercio intraindustrial durante 1995-2017. En particular, se analizan las diferencias en el patrón de inserción intraindustrial en un contexto marcado por la existencia (Chile, Costa Rica y Perú) o no (México) de acuerdos de libre comercio con China. El estudio se completa con un análisis econométrico (efectos fijos) de los determinantes del comercio intraindustrial. Los resultados muestran una inserción de bajo perfil intraindustrial, con la excepción de algunas partidas específicas relativas a productos eléctricos y de la industria automotriz. Por otro lado, se confirma el efecto positivo del tamaño de la economía, de la inversión extranjera directa y de la diferenciación de producto, así como negativo de la diferencia en el nivel de ingreso; mientras que existe una indefinición en el papel de los acuerdos de libre comercio con China.<br /><br /></p><p>THE TRADE INTEGRATION OF CHINA IN LATIN AMERICA</p><p> </p><p><strong>ABSTRACT</strong><br />This paper studies China’s bilateral trade with Mexico, Chile, Costa Rica and Peru from the perspective of intra-industrial trade during 1995-2017. In particular, the differences in the pattern of intra-industrial insertion are analyzed in a context characterized by the existence (Chile, Costa Rica and Peru) or not (Mexico) of free trade agreements with China. An econometric analysis (fixed effects) of the determinants of intra-industrial trade completes the study. The results show a low intra-industrial profile, except for some specific items related to electrical products and the automotive industry. The positive effect of the size of the economy, foreign direct investment and product differentiation is also confirmed, as well as the negative effect of the difference in income level. However, there is an undefined role for free trade agreements with China.</p>

scholarly journals The Endogeneity Of Association Agreements And Their Impact On Trade For Eastern Countries: Empirical Evidence For Romania

2011 ◽  
Vol 7 (1) ◽  
Author(s):  
Christophe Rault ◽  
Ana Maria Sova ◽  
Robert Sova
Keyword(s):  
European Union ◽  
Free Trade ◽  
Positive Impact ◽  
Free Trade Agreements ◽  
Trade Agreements ◽  
Trade Flows ◽  
Economic Literature ◽  
Association Agreement ◽  
European Union Countries

The main goal of regionalization is the creation of free trade areas and the guarantee for countries to accede to a widened market. Many studies dealing with the effects of regional free trade agreements on trade flows already exist in economic literature and the increase of regional agreements among nations has recently stressed the key role of regionalization. However, the effects of agreements on trade have not yet been clearly determined in those studies. Our research in this paper aims at reassessing the genuine role of associations. For this matter, we particularly study the association of Romania with European Union countries. Our econometric analysis based on qualitative choice models highlights in particular why European countries chose to conclude an association agreement with Romania, and stresses the fact that European Union countries select endogenously the conclusion of association agreements. We also find a 29% positive impact of the association agreement on Romanian export performances.

scholarly journals INSTITUTIONS AND INTRA-REGIONAL TRADE IN CEFTA 2006: A GRAVITY APPROACH

2019 ◽  
Vol 1 (17) ◽  
pp. 11
Author(s):  
Łukasz Klimczak ◽  
Jelena Trivić
Keyword(s):  
Free Trade ◽  
Bilateral Trade ◽  
Free Trade Agreements ◽  
Trade Agreements ◽  
Trade Flows ◽  
Positive Sign ◽  
Regional Trade ◽  
Bilateral Trade Flows ◽  
The Impact

The purpose of this paper is to identify factors that had an influence on bilateral trade flows among the CEFTA countries with special emphasize: 1) on the role of CEFTA agreement and its preceding network of bilateral free trade agreements, and 2) on the role of institutions in facilitating intra-regional trade. In order to assess the impact of these variables on trade, we employed an augmented gravity model based on panel data of the CEFTA countries in fifteen years period (2000-2014). The results of the research suggest that there was a positive and statistically significant role of the CEFTA agreement on trade between its parties but the influence of the preceding bilateral free trade agreements was even higher. Results also showed that institutions can play an important role as trade facilitators, but mainly in the importing country while in the exporting country only three of six variables showed to have a positive sign.

How Free Trade Agreements Affect Exports and Imports in Vietnam

2017 ◽  
Vol 33 (5E) ◽  
Author(s):  
Nguyen Thi Hoang Oanh
Keyword(s):  
International Trade ◽  
Free Trade ◽  
World Economy ◽  
Free Trade Agreement ◽  
Free Trade Agreements ◽  
Trade Agreement ◽  
Trade Agreements ◽  
Trade Flows ◽  
Hub And Spoke ◽  
The Impact

The important year of 1995 marked Vietnam’s first integration as a member of ASEAN. By 2016, Vietnam had negotiated, signed, and implemented sixteen free trade agreements. They include both multilateral and bilateral free trade agreements such as the China-ASEAN, Vietnam-Chile, and Vietnam-Japan agreements. By signing free trade agreements Vietnam can increase trade flows in bilateral and multilateral developed-country FTA scenarios. Trade creation and diversion can be found in multilateral developing-country FTA scenarios and the author finds the impacts of each free trade agreement is different if analyzed for each 2-digit commodity. Keywords Free trade agreement, trade, import, export.t commodity References [1] Baier, S.L., Bergstrand, J.H., “Do free trade agreements actually increase members’ international trade?”, Journal of International Economics, 71 (2007), 72-95.[2] Chong, Soo Yuen & Hur, Jung, “Small Hubs, Large Spokes and Overlapping Free Trade Agreements”, The World Economy, 10.1111/j (2008), 1467-9701.[3] Hur, J., Alba, J. D., & Park, D., “Effects of hub-and-spoke free trade agreements on trade: A panel data analysis”, World Development, 38 (2010) 8, 1105-111.[4] McDonald, S. & Walmsley, Terrie, “Bilateral Free Trade Agreements and Customs Unions: The Impact of the EU Republic of South Africa Free Trade Agreement on Botswana”, The World Economy, 10.1111/j (2008),1467-9701.[5] Pan, S., Welch, M., Mohanty, S., Fadiga, M., & Ethridge, D., “Welfare analysis of the Dominican Republic-Central America-United States free trade agreement: The cotton textile and apparel industries”, The International Trade Journal, Vol. XXII (2008) 2, 1521-0545.[6] Benedictis, L., Santis, R., Vicarelli, C., “Hub-and-Spoke or else? Free trade agreements in the “enlarged” European Union”, The European Journal of Comparative Economics, 2 (2005) 2, 245-260.[7] Nguyen, Q.H., & Nguyen, T.H., “The impact of free trade agreement on trade flow of goods in Vietnam”, Vietnam Economist Annual Meeting, 2015[8] Das, R.U., Rishi, M., Dubey, J.D., “Asean plus six and successful FTAS: Can India propel intra-industry trade flows?”, The Journal of Developing Areas, 50 (2016) 2.[9] Hayakawa, K., “Impact of diagonal accumulation rule on FTA utilization: Evidence from bilateral and multilateral FTAs between Japan and Thailand”, J. Japanese Int. Economies, 32 (2014), 1-16.[10] Jennifer Y. Leung, “Bilateral vertical specialization between the U.S. and its trade partners - before and after the free trade agreements”, International Review of Economics and Finance, 45 (2016), 177-196.[11] Jongwanich, J., & Kohpaiboon, A., “Exporter responses to FTA tariff preferences: evidence from Thailand”, Asian Pacific Economic Literature (2017).[12] Lakatos, C., & Walmsley, T., “Investment creation and diversion effects of the ASEAN-China free trade agreement”, Economic Modelling, 29 (2012), 766-779.[13] Vanhnalat, B. at el., “Assessment the Effect of Free Trade Agreements on Exports of Lao PDR”, International Journal of Economics and Financial Issues, 5 (2015) 2, 365-376.[14] Vietnam Chamber of Commerce and Industry (VCCI), “Freedom of international trade in Vietnam”, Research report, Vietnam, 2015.

Sign in / Sign up

Export Citation Format

Share Document