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Trade Creation and Trade Diversion Effects of ASEAN-Japan Comprehensive Economic Partnership (AJCEP)

Szalanczi, Adrienn LU and Trinh, Melody (2017) NEKH02 20171
Department of Economics
Abstract
This paper examines the impact of the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) on import by studying both the trade creation and trade diversion effect. The standard gravity model is augmented and tested on a sample of 36 countries based on aggregated data from 2000 to 2015. To obtain consistent and efficient estimation results, unobserved multilateral resistance terms will be addressed and endogeneity bias in policy variables controlled by accounting for the unobservable endogeneity between the FTA variable and the error term. The estimations indicate that the impact of the AJCEP is not revealed. However, an export trade creation effect was found when the direction and magnitude of trade were considered. Finally, the results... (More)
This paper examines the impact of the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) on import by studying both the trade creation and trade diversion effect. The standard gravity model is augmented and tested on a sample of 36 countries based on aggregated data from 2000 to 2015. To obtain consistent and efficient estimation results, unobserved multilateral resistance terms will be addressed and endogeneity bias in policy variables controlled by accounting for the unobservable endogeneity between the FTA variable and the error term. The estimations indicate that the impact of the AJCEP is not revealed. However, an export trade creation effect was found when the direction and magnitude of trade were considered. Finally, the results also imply that countries observe greater benefits in joining the FTA, the farther they are located from one another. (Less)
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author
Szalanczi, Adrienn LU and Trinh, Melody
supervisor
organization
course
NEKH02 20171
year
type
M2 - Bachelor Degree
subject
keywords
AJCEP, ASEAN, Gravity model, Panel data, Trade Creation, Trade Diversion
language
English
id
8925019
date added to LUP
2017-09-12 11:56:27
date last changed
2018-12-03 13:36:03
@misc{8925019,
  abstract     = {This paper examines the impact of the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) on import by studying both the trade creation and trade diversion effect. The standard gravity model is augmented and tested on a sample of 36 countries based on aggregated data from 2000 to 2015. To obtain consistent and efficient estimation results, unobserved multilateral resistance terms will be addressed and endogeneity bias in policy variables controlled by accounting for the unobservable endogeneity between the FTA variable and the error term. The estimations indicate that the impact of the AJCEP is not revealed. However, an export trade creation effect was found when the direction and magnitude of trade were considered. Finally, the results also imply that countries observe greater benefits in joining the FTA, the farther they are located from one another.},
  author       = {Szalanczi, Adrienn and Trinh, Melody},
  keyword      = {AJCEP,ASEAN,Gravity model,Panel data,Trade Creation,Trade Diversion},
  language     = {eng},
  note         = {Student Paper},
  title        = {Trade Creation and Trade Diversion Effects of ASEAN-Japan Comprehensive Economic Partnership (AJCEP)},
  year         = {2017},
}