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

Publication Date01 Feb 2021
DOI10.1177/0015732520961330
AuthorSunder Ramaswamy,Abishek Choutagunta,Santosh Kumar Sahu
SubjectArticles
Evaluating Asian Free
Trade Agreements:
What Does Gravity
Model Tell Us?
Sunder Ramaswamy1,
Abishek Choutagunta2 and
Santosh Kumar Sahu3
Abstract
This paper evaluates the performance of Free Trade Agreements (FTAs) by ana-
lysing 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 barri-
ers, pumping in investments on transport infrastructure and improving productiv-
ity of the partners as a whole which has positive effects on GDP and thus trade.
JEL Codes: F13, F14, C23
Keywords
International trade flows, gravity model, Asia, PPML
Article
1 Krea University, Sri City, Andhra Pradesh, India.
2 University of Hamburg, Germany.
3 Department of Humanities and Social Sciences, Indian Institute of Technology Madras, Chennai,
Tamil Nadu, India.
Corresponding author:
Santosh Kumar Sahu, Department of Humanities and Social Sciences, Indian Institute of Technology
Madras, Chennai 600036, Tamil Nadu, India.
E-mail: santosh@iitm.ac.in
Foreign Trade Review
56(1) 60–70, 2021
© 2020 Indian Institute of
Foreign Trade
Reprints and permissions:
in.sagepub.com/journals-permissions-india
DOI: 10.1177/0015732520961330
journals.sagepub.com/home/ftr

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT