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Determinants of trade and investment in Southeast Asia : an application of the gravity trade model

Hemkamon, Kanwana (2007)
Ph.D. thesis, University of Birmingham.

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This study is an analysis of the determinants of bilateral trade and foreign direct investment in ASEAN at the time of the establishment of ASEAN Free Trade Area and its enlargement. Beginning with an economic perspective on ASEAN and a review of the literature, the theoretical underpinning of the model is then demonstrated. This confirms that the gravity trade model can be derived from several trade theories. The model is then used to assess ASEAN’s trade pattern in both aggregate and disaggregate level. The results show that, although there is trade diversion regarding its importing activities, the positive effect of ASEAN’s trade creation is higher than the negative effect of its trade diversion. Moreover, the impact of distance is not diminishing over time. The disaggregate model shows that the products that are not convenient to transport have high distant effect. The results from FDI model confirm that the gravity variables are significant determinants of FDI. The negative effect of proximity suggests that there is Vertical-FDI in this region and FDI is complementary to trade. ASEAN should continue to facilitate trade and capital movement among members in order to increase aggregate economic activities and bring economic prosperity to the region in a whole.

Type of Work:Ph.D. thesis.
Supervisor(s):Sen, Somnath
School/Faculty:Schools (1998 to 2008) > School of Social Science
Department:Department of Economics
Keywords:Gravity model, ASEAN, trade creation, regional integration
Subjects:HF Commerce
HB Economic Theory
Institution:University of Birmingham
Library Catalogue:Check for printed version of this thesis
ID Code:388
This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.
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