Does regionalism lead to more global trade integration in East Asia?

Research output: Contribution to journalArticle

26 Citations (Scopus)

Abstract

Since early 1999, global trade liberalization has been sidelined as regional trade agreements (RTA) have become the preferred choice in East Asia. Does this shift suggest that global trade and welfare levels will be raised? In contrast to unilateral trade liberalization, RTAs may well cause both 'trade creation' and 'trade diversion,' so that their net effect on global trade and welfare becomes ambiguous. It is conjectured that RTAs among "natural trading partners" are more likely to be trade-creating, and less likely to divert trade from non-member countries, in which case welfare will improve. We find that if an RTA involves geographically proximate countries (measured either by distance or border), trade significantly increases among them. At the same time, geographical proximity also contributes to increasing trade between members and the rest of the world. We examine how existing or proposed East Asian trading blocs affect intra-bloc and extra-bloc trade and thereby global trade. We find that the East Asian RTAs are likely to create more trade among members without diverting trade from non-members.

Original languageEnglish
Pages (from-to)283-301
Number of pages19
JournalNorth American Journal of Economics and Finance
Volume17
Issue number3
DOIs
Publication statusPublished - 2006 Dec 1

Fingerprint

Global trade
Trade integration
East Asia
Regionalism
Trade liberalization
Asia
Regional trade agreements
Trade diversion
Trade creation
Trade blocs
Geographical proximity

Keywords

  • East Asia
  • Global trade integration
  • Natural trading partner
  • Regional trade agreement
  • Regional trade integration

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Does regionalism lead to more global trade integration in East Asia? / Lee, Jong-Wha; Shin, Kwanho.

In: North American Journal of Economics and Finance, Vol. 17, No. 3, 01.12.2006, p. 283-301.

Research output: Contribution to journalArticle

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