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The Effects of ASEAN Free Trade Agreement (AFTA) on Intra ASEAN Trade: 1986-2010

Normaz Wana Ismail and Collin Wong Koh King

Pertanika Journal of Tropical Agricultural Science, Volume 21, Issue S, September 2013

Keywords: AFTA, Intra-ASEAN trade, gravity model, AEC

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The ASEAN Free Trade Agreement (AFTA) was set up in 1993 and has already shown significant effects by 2010. This study empirically investigates the effect of trade creation on intra-ASEAN trade for the period of 1986 to 2010. Using the gravity model, we find that major determinants of bilateral trade in ASEAN are GDP, population, relative endowment, distance and common border. A dummy variable is introduced to measure the intra-ASEAN trade and trade creation among five ASEAN member countries. Our finding suggests that trade between the selected member countries remains strong even during the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis.

ISSN 1511-3701

e-ISSN 2231-8542

Article ID

JSSH-0938-2013

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