nep-int New Economics Papers
on International Trade
Issue of 2014‒12‒29
24 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. World Market Access of Emerging-Market Firms: The Role of Foreign Ownership and Access to External Finance By Horst Raff; Natalia Trofimenko
  2. Does Trade Liberalization Increase Average Plant Productivity? By Timothy Kehoe; Pau Pujolas; Wyatt Brooks
  3. Trade in tasks, tariff policy and effective protection rates By Diakantoni, Antonia; Escaith, Hubert
  4. Trade networks and colonial trade spillovers. By A. Berthou; H. Ehrhart
  5. Endogenous FDI Spillovers from Japan to Russia and China with Spillover-Prevention Costs By Kiyoshi Matsubara
  7. International Trade and Firm-level Markups when Location and Quality Matter By Flora Bellone; Patrick Musso; Lionel Nesta; Frederic Warzynski
  8. Regional Centrality and Tax Competition for FDI By Darby, Julia; Ferrett, Ben; Wooton, Ian
  9. The Bali Trade Facilitation Agreement and Rulemaking in the WTO: Milestone, Mistake or Mirage? By Hoekman, Bernard
  10. New trade models, elusive welfare gains By Behrens, Kristian; Kanemoto, Yoshitsugu; Murata, Yasusada
  11. Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results By Debashis Chakraborty; Sacchidananda Mukherjee
  12. Sustaining India – China Bilateral Trade: An Analysis of India’s Rising Trade deficit with China. By Sunitha Raju
  13. Acquisitions by Multinationals and Trade Liberalization By Ray Chaudhuri, A.
  14. Trade Policy Challenges in a Small, Open, Fragile, Postconflict Economy: Cambodia By Hill, Hal; Menon, Jayant
  15. Indirect Influences in International Trade By Rafael Diaz; Laura Gomez
  16. Domestic Product Standards and Free Trade Areas: Implications for the EU-Japan FTA By Akihiko Yanase; Hiroshi Kurata
  17. Trade and Tasks: An Exploration over Three Decades in Germany By Becker, Sascha O.; Muendler, Marc-Andreas
  18. The persistent heterogeneity of trade patterns: A comparison of four European Automotive Global Production Networks By Frigant, Vincent; Zumpe, Martin
  19. Learning to export and learning by exporting: The case of Ethiopian manufacturing By Siba, Eyerusalem; Gebreeyesus, Mulu
  20. The Stringency of Environmental Regulations and Trade in Environmental Goods By Jehan Sauvage
  21. Importers, Exporters and Multinationals: Exploring the Hierarchy of International Linkages By Gullstrand, Joakim; Olofsdotter, Karin; Thede, Susanna
  22. Relationship between Remittance, Export, Foreign Direct Investment and Growth: A Panel Cointegration and Causal Analysis in South Asia By Shahzad, Syed Jawad Hussain; Rehman, Mobeen Ur; Abbasi, Faiza; Zakaria, Muhammad
  23. Innovation and export in SMEs: the role of relationship banking. By Serena Frazzoni; Maria Luisa Mancusi; Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
  24. ASEAN Commercial Policy: A Rare Case of Outward-Looking Regional Integration By Hill, Hal; Menon, Jayant

  1. By: Horst Raff (University of Kiel; Kiel Institute for the World Economy; CESifo); Natalia Trofimenko (Kiel Institute for the World Economy)
    Abstract: This paper uses micro-data fromtheWorld Bank Investment Climate Surveys 2002-2006 to investigate how foreign ownership and access to external finance affect the likelihood of manufacturers in emerging markets to export and/or import. Applying propensity score matching to control for differences across firms in terms of labor productivity, size, etc., we find that foreign ownership and access to external finance are statistically significant determinants of the likelihood that a firm will export or import. Foreign ownership has a large positive impact on the likelihood to engage in direct trade but a negative effect on the likelihood to trade through intermediaries; the effects vary across upper and lower middle income countries. Access to external finance has a modest but positive effect on the likelihood to engage in any of the modes of connecting with foreign customers or suppliers.
    Keywords: international trade, foreign ownership, financing, developing countries, intermediation, multinational enterprise
    JEL: F12 F14 F23 O19
    Date: 2014–11
  2. By: Timothy Kehoe (University of Minnesota); Pau Pujolas (McMaster University); Wyatt Brooks (University of Notre Dame)
    Abstract: In the standard heterogeneous firm model of Hopenhayn (1992) and Melitz (2003), more efficient firms export and trade liberalization leads to higher average efficiency among firms. In data for Columbian plants 1981–1991, we see that the average level of productivity among exporters is higher than that among non exporters and that trade liberalization led to an increase in average firm productivity. Are there facts in the data explained by the Hopenhayn-Meltiz model? The measure of product in the data differs from the measure of efficiency in the model. In fact, in a calibrated version of the Hopenhayn-Meltiz model, the average level of productivity among exporters is lower than that among non exporters and trade liberalization leads to an increase in average firm productivity. The impact of trade liberalization on productivity is a puzzle for the standard model.
    Date: 2014
  3. By: Diakantoni, Antonia; Escaith, Hubert
    Abstract: With the rise of global value chains, effective protection rates (EPRs) provide important insights on the impact of nominal tariffs on the competitiveness of industries. Building on the results of the OECD-WTO Trade in Value-Added TiVA database, the paper analyses the evolution of EPRs in about 50 developed and developing countries from 1995 to 2008. The paper reviews also the role of preferential agreements on effective protection as well as the impact of tariffs on the production costs of services. A final chapter is dedicated to the underlying patterns that may explain those EPR profiles.
    Keywords: Tariff; Effective Protection; Trade in Value Added; International Outsourcing; Competitiveness
    JEL: C38 C67 D24 F13 F23 O19
    Date: 2014–12–15
  4. By: A. Berthou; H. Ehrhart
    Abstract: This paper provides new empirical evidence regarding the formation of international trade networks. We test whether trade experience in a given country can generate new trade opportunities with other countries, and investigate the role played by geographical and political factors. We address the issue of the endogeneity in the formation of trade networks by using the experience of ancient trade linkages between former colonies and their former colonizers (colonial trade linkages). We firstly show, using aggregate trade data, that former colonies have more trade with countries being geographically more proximate or having more trade with the former colonizer (colonial trade spillovers). We then show that the microeconomic dynamics of former colonies’ exports and imports at the product level is significantly influenced by the geographical proximity between trade partners and the former colonizer, or their degree of economic integration. These results are consistent with the predictions from models of trade networks (Chaney2014). Overall, they confirm that the microeconomic dynamics of trade contribute to shape the cross-sectional distribution of aggregate trade flows across countries.
    Keywords: International trade dynamics, networks formation, colonies.
    JEL: F14 F15
    Date: 2014
  5. By: Kiyoshi Matsubara
    Abstract: This paper explores the role of FDI-spillover prevention costs in the strategic choice for a MNE of a developed country such as Japan about whether it perform FDI to an emerging economy such as Russia and China and about a degree of FDI spillovers that it allows. After discussing the exogenous spillover case in a duopoly model, this paper shows that with a quadratic prevention cost function, the MNE may choose a positive level of spillovers lower than the benchmark exogenous level, and also shows how endogenizing spillovers affect the home firmÂfs decision on plant location. In the m-FDI-host-country firm case, the effects of the number of FDI-host country firms on the level of spillovers and the cutoff value of trade cost are not always monotonic.
    Keywords: FDI; Endogenous Spillovers; Spillover-prevention Costs;
    JEL: F12 F23 O33
    Date: 2014–11
  6. By: Rickard, Bradley J.; Gergaud, Olivier; Ho, Shuay-Tsyr; Hu, Wenjing
    Abstract: The United States and the European Union (EU) have embarked on ambitious negotiations to create a comprehensive free trade agreement known as the Transatlantic Trade and Investment Partnership (TTIP). Agricultural markets receive relatively high levels of support and protection in both regions, and therefore are sensitive to the discussions surrounding the TTIP. Wine is the highest valued agricultural product traded between the United States and the EU, and any reduction in trade barriers resulting from the TTIP has the capacity to generate additional trade in this sector. We carefully develop parameters to characterize the effects of tariffs and domestic regulations that affect production and consumption of wine in these two regions. Results show that reductions in tariffs would have relatively small effects in these wine markets, whereas reductions in EU domestic policies that affect wine grape production would have much larger trade and welfare implications.
    Keywords: Domestic regulations, EU-U.S. Free Trade Agreement, Non-tariff barriers, Simulation model, Trade policy, Wine, Agribusiness, International Development, International Relations/Trade, Q13, Q17,
    Date: 2014–11
  7. By: Flora Bellone (University of Nice Sophia Antipolis; GREDEG CNRS); Patrick Musso (University of Nice Sophia Antipolis; GREDEG CNRS); Lionel Nesta (OFCE Sciences Po.); Frederic Warzynski (Aarhus University)
    Abstract: In this paper, we estimate firm-level markups and test some micro-level predictions of a model of international trade with heterogenous firms and endogenous mark-ups. Our theoretical framework is an extended version of the Melitz and Ottaviano (2008) (MO) model which features both quality and spatial differentiation across firms. In line with our model, we find that firm markups are positively related to firm productivity and negatively related to the toughness of local competition. Considering the relationship between firm markups and exports, we find evidence that the quality enhancing channel overbalances the price depressing channel of global competition.
    Keywords: Markups, Productivity, Exports, Firm-level data, France
    JEL: F12 L1
    Date: 2014–11
  8. By: Darby, Julia; Ferrett, Ben; Wooton, Ian
    Abstract: We examine a trade model where three countries compete for an exogenous number of firms. In our hub-and-spoke framework, one country is the hub through which all trade with and between spokes takes place. We establish the distribution of industrial activity in the absence of taxes and compare it to the equilibrium when countries compete to attract firms. Even when all countries are the same size, the centrality of the hub sets it apart. We determine how this trading pattern matters, comparing it to a structure with direct trade between all countries. The implications of international tax competition are also examined.
    Keywords: corporate taxes; devolution; hub and spoke; trade costs
    JEL: F15 F23 H25 H73
    Date: 2014–08
  9. By: Hoekman, Bernard
    Abstract: The Agreement on Trade Facilitation (TFA) embodies the first set of new multilateral rules to have been negotiated under auspices of the WTO, part of a small package of decisions centering on matters of interest to developing countries that was “harvested” from the broader Doha round. This paper analyzes the outcome of the trade facilitation talks, assesses the role of the epistemic community that provided information to negotiators and reflects on the lessons and possible implications of the TFA experience for the prospects for new rule-making and cooperation on regulatory matters in the WTO. The TFA illustrates both the potential and the difficulty of negotiating generally applicable stand-alone agreements in the WTO and demonstrates the importance of issue linkage in achieving cooperation in trade policy matters.
    Keywords: economic development; international negotiations; trade agreements; trade costs; WTO
    JEL: F13 F53 O24 R11
    Date: 2014–10
  10. By: Behrens, Kristian; Kanemoto, Yoshitsugu; Murata, Yasusada
    Abstract: We generalize the formulae for welfare changes by Arkolakis, Costinot, and Rodríguez-Clare (2012) and Melitz and Redding (2014a) to allow for various cardinalizations of the subutility functions for varieties. Despite the same macro restrictions and the same equilibrium allocations, our new formula coincides with the original ones if and only if the number of varieties is invariant to foreign shocks. When product diversity responds to foreign shocks, different cardinalizations generate different welfare changes, thus revealing a fundamental difficulty in quantifying welfare gains implied by new trade models.
    Keywords: cardinalization; new trade models; product diversity; subutility function; welfare gains from trade
    JEL: F11 F12
    Date: 2014–11
  11. By: Debashis Chakraborty (Indian Institute of Foreign Trade, Kolkata, India); Sacchidananda Mukherjee (National Institute of Public Finance and Policy, New Delhi, India)
    Abstract: Over the last decade cross-country trade and investment flows have increased considerably, which is often linked to climate change concerns. The present analysis attempts to understand the influence of trade and investment flows on CO2 emissions through panel data model estimation for a set of 181 countries over 1990-2009. The empirical findings confirm that both in case of lower and higher income countries, higher merchandise trade growth in general and service and merchandise export growth in particular leads to the higher CO2 emission growth in their territories. Both FDI inward and outward stock is found to be positively related to CO2 emission, reflecting a complementary relationship between the two. The empirical results indicate that the composition, scale and technology effects significantly influence the trade-climate change interrelationship.
    Keywords: environment and trade, foreign direct investment, climate change; democracy.
    JEL: F21 Q56
    Date: 2013–08
  12. By: Sunitha Raju (Indian Institute of Foreign Trade, Kolkata, India)
    Abstract: This paper evaluates India’s export opportunities to China as well as market access constraints faced by Indian firms in China at the disaggregated product level. Our main conclusions include: By 2015, it is expected that average wages in China would rise by 80% thereby loosing competitiveness in labour intensive industries particularly when compared to other South East Asian countries. These developments provide new opportunities to India to diversify and increase value-added exports to China. 30 products at HS 4 digit have been identified with potential export opportunities for India. Of these, 7 products are globally export competitive. Most of these identified products are value added intermediaries. In addition to these, there are a number of products where India’s share in China’s imports is less than 1%. Most of these products fall under Electrical Machinery (85), Machinery (84), Optical equipment (90), Plastics (39) and Organic Chemicals (29). As far as market access is concerned, Tariff does not seem to emerge as a major constraint for most products except for agricultural products. In addition to tariff, each product is subjected to a number of NTBs that cover Import licensing and Inspection, Registration of environmental management, labeling requirements etc. In addition to these, agricultural products are subjected to Food safety law, Quarantine measures, Food additive standards, MRL standards etc.
    Keywords: India, China, Export potential, Market access.
    JEL: F14
    Date: 2014–07
  13. By: Ray Chaudhuri, A. (Tilburg University, Center For Economic Research)
    Abstract: Abstract This paper develops a theoretical framework where a multinational firm (MNE) is allowed to acquire or sell a productive asset in multiple segmented asset markets. The asset is used to produce a final good which can be sold in multiple countries, with segmented product markets, undergoing trade liberalization. I explicitly model the asset markets as well as the product markets. The paper identifies initial conditions in terms of the MNE’s pre-liberalization asset holdings across different segmented markets as a crucial factor for determining whether merger waves are triggered by trade liberalization. The more asymmetric the pre-liberalization asset holdings of the MNE across the multiple segmented markets, the more likely that trade liberalization induces an international merger wave that may harm consumers by raising product prices in multiple markets.
    Keywords: acquisitions; multinational firms; endogenous mergers; cross-border mergers; trade liberalization
    JEL: F23 L12 L41 F13
    Date: 2014
  14. By: Hill, Hal (Australian National University); Menon, Jayant (Asian Development Bank)
    Abstract: This paper analyzes the World Trade Organization’s (WTO) Trade Policy Review: Cambodia, the first completed for the country. The report highlights Cambodia’s rapid economic growth after one of the world’s worst genocides in the 20th century. This growth has been underpinned by open trade and investment policies in the context of dynamic neighborhood growth effects. The trade regime is mainly tariff-based, with modest inter-sectoral variations in rates. Cambodia has limited trade policy space. It is a signatory to the 10-nation ASEAN Free Trade Agreement, soon to become the ASEAN Economic Community. Moreover, given its long and porous borders with the much larger, dynamic economies of Thailand and Viet Nam, any major cross-border price differences will quickly result in informal trade with these economies, and the People’s Republic of China nearby. Most of the country’s trade policy challenges are “behind-the-border” issues, a legacy of a generation of civil war and conflict. These include weak bureaucratic capacity, high levels of corruption, poor infrastructure, and limited human capital.
    Keywords: Cambodia; trade policy; ASEAN; globalization; weak institutions
    JEL: F14 O53
    Date: 2014–10–01
  15. By: Rafael Diaz; Laura Gomez
    Abstract: We address the problem of gauging the influence exerted by a given country on the global trade market from the viewpoint of complex networks. In particular, we apply the PWP method for computing indirect influences on the world trade network.
    Date: 2014–11
  16. By: Akihiko Yanase; Hiroshi Kurata
    Abstract: This study considers endogenous determination of domestic standards on products that cause negative consumption externalities in the presence of a preferential trade agreement (PTA) in a three-country world. In particular, we examine how a PTA affects the optimal levels of external tariffs and standards, which are chosen by each country, and national welfare. In light of recent importance of standards or regulations that may act as nontariff barriers in PTAs, several questions will arise. Do standards become more or less stringent under a PTA than in the absence of it? After a formation of the PTA, do member or nonmember countries become better off? Do potential PTA members have an incentive to harmonize their standards? Among the several forms of PTAs, we focus on free trade areas (FTAs), where each member country chooses its external tariffs independently. We build a three-country oligopolistic trade model by incorporating the endogenous determination of standards by national governments. In this paper, we consider standards for controlling negative externalities generated by consumption of goods: setting a stringent standard eliminate negative consumption externality, and cost rise with the standard. In order to enter the importer country's market, foreign exporters must produce goods that meet the import's standard, and thus the standard can be a nontariff barrier. Governments are assumed to be benevolent, without any political incentives to set their respective standards. In this paper, we obtain the following results: (i) Compared with the policy game in the absence of FTAs, an FTA makes the member countries to choose more stringent standards. (ii) Regarding the national welfare in each country, the FTA member countries may or may be better off under the formation of an FTA, while the nonmember country becomes better off for the case of low degree of transboundary externalities. and (iii) By comparing the case in which FTA members independently determine their respective national standards with the case in which the FTA member countries harmonize their standards within the FTA, such harmonization of standards will lead the member countries to choose less stringent standards, and make the formation of the FTA more favorable, provided the degree of transboundary externalities is not so high.
    JEL: F12 F13 F15 F18
    Date: 2014–11
  17. By: Becker, Sascha O.; Muendler, Marc-Andreas
    Abstract: This paper combines representative worker-level data that cover time-varying job-level task characteristics of an economy over a long time span with sector-level bilateral trade data. We carefully create longitudinally consistent workplace characteristics from the German Qualification and Career Survey 1979-2006 and prepare trade flow statistics from varying sources. Four main facts emerge: (i) intermediate inputs constitute a major share of imports, and their relevance grows especially in the early decade; (ii) the German workforce increasingly specializes in workplace activities and job requirements that are typically considered non-offshorable, mainly within and not between sectors and occupations; (iii) the imputed activity and job requirement content of German imports grows relatively more intensive in work characteristics typically considered offshorable; and (iv) labour-market institutions at German trade partners are largely unrelated to the changing task content of German imports but German sector-level outcomes exhibit some covariation consistent with faster task offshoring in sectors exposed to lower labour market tightness. We discuss policy implications of these findings.
    Keywords: demand for labour; labour force survey; offshoring; trade in tasks
    JEL: F14 F16 J23 J24
    Date: 2014–11
  18. By: Frigant, Vincent; Zumpe, Martin
    Abstract: In this paper, we examine the structure and the evolution of international exchanges of auto parts over the 2000-2012 period for four European countries. The first part of our study reviews the literature and points out four stylized facts about the geography of automotive supply networks. In section 2 we propose an analysis of the organisation of automotive supply chains based on the global production networks framework. We give details about this approach by stating the nature of trade flows that occur in these networks, and by highlighting the importance of intra-firms flows. In the third part, we compare the structure of external GPNs of German, Spanish, British and French automotive firms located in these countries. On the basis of Chelem data about auto parts exchanges, we examine in a comparative way the evolution of intra-continental and intercontinental flows. Our results highlight the heterogeneity of situations and of trajectories in the different countries.
    Keywords: Global Production Networks; Automotive industry; International Comparison; Auto-parts industry; Regional integration; Globalisation
    JEL: F14 F15 F23 L62 R11
    Date: 2014–11–25
  19. By: Siba, Eyerusalem; Gebreeyesus, Mulu
    Abstract: In this study, we investigate the relationship between exporting and firm performance using a longer panel dataset of Ethiopian manufacturing firms for the period 1996?2009. We test two hypotheses regarding exporting: selection into exporting versus learn
    Keywords: exports, learning, African manufacturing
    Date: 2014
  20. By: Jehan Sauvage
    Abstract: This report assesses conceptually and empirically the extent to which the stringency of environmental regulations drives international trade in environmental goods. Many of the measures governments adopt to address issues such as local air and water pollution or GHG emissions take the form of regulations that aim to change the behaviour of firms or households. Compliance by private actors with those regulations in turn generates a growing market for environmental goods and services that is increasingly international in scope as more countries tighten their environmental regulations. Regulatory stringency thus spurs the development of a market for a whole range of equipment specifically meant for preventing and abating pollution, with important implications for international trade in such equipment. The different indicators of regulatory stringency considered in the present analysis generally support the notion that the stringency of environmental regulations positively affects countries’ specialisation in environmental products, even when considering specific sectors such as solid-waste management or wastewater treatment. While increased trade in environmental products is not an end in itself, the environmental benefits this entails can contribute to global improvements in environmental quality. By increasing demand for environmental products and technologies, environmental policy can complement trade policy in supporting pollution-reduction efforts not just domestically, but also abroad.
    Keywords: environment, trade, environmental goods, comparative advantage, environmental regulations, wastewater treatment, solid waste management
    JEL: F14 F18 Q53 Q56 Q58
    Date: 2014–12–05
  21. By: Gullstrand, Joakim (Department of Economics, Lund University); Olofsdotter, Karin (Department of Economics, Lund University); Thede, Susanna (Institute for European Studies, University of Malta)
    Abstract: The purpose of this paper is to empirically explore two dimensions of the firm hierarchy of international market-specific linkages using data for Swedish manufacturing firms over the 1997 to 2007 period. First, we investigate the productivity ordering with respect to importing, exporting and investing abroad. Second, we investigate the productivity ordering with respect to linkage complexity (i.e. the number of linkages at firm level). Our findings support a general productivity hierarchy from importing to exporting and then investing abroad as well as from low- to high-linkage complexity. However, an industry-by-industry examination shows that the hierarchical structure is only generally upheld for linkage complexity while the ordering of the three linkages does not exhibit the same regularity across industries. In extending the analysis, we find these irregularities to be upheld by industry characteristics. Lastly, we go beyond the productivity ordering and explore firm characteristics correlated with the linkage complexity.
    Keywords: manufacturing firms; productivity ordering; market linkages
    JEL: F14 F21 F23
    Date: 2014–12–05
  22. By: Shahzad, Syed Jawad Hussain; Rehman, Mobeen Ur; Abbasi, Faiza; Zakaria, Muhammad
    Abstract: The relationship among remittances, foreign direct investments (FDI), exports and economic growth is known to have an important role in economic literature for countries suffering from technological distress and unemployment problems. This paper explores the long and short run relationship among remittances, exports, foreign direct investment and economic growth using data of South Asian countries. The study covers the period from 1989 to 2011. Stationarity of the variables have been examined through both first and second generation unit root tests to cater for Cross-section Dependence. After confirmation of panel cointegration, long term coefficients have been estimated by Fully Modified OLS (FMOLS) and Dynamic Ordinary Least Square (DOLS) models. Pooled Mean Group (PMG) methodology is applied to have an examination of the cause and effect relation among the associated variables. Results of the applied test suggest the presence of cointegration among the tested variables. FMOLS and DOLS estimation analysis reveals a positive impact of capital, remittances, exports, and FDI on economic growth whereas a negative impact of labor on growth is observed. The causality analysis confirms the presence of long term equilibrium relation among labor, economic growth, capital, remittances, exports, and foreign direct. In short run, exports Granger cause growth and FDI Granger cause exports. Feedback causality is also confirmed between remittances and capital in the South Asian countries.
    Keywords: Remittances, Exports, FDI, Economic Growth, South Asia
    JEL: E21 F43
    Date: 2014–11–29
  23. By: Serena Frazzoni; Maria Luisa Mancusi; Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
    Abstract: This paper assesses the role of relationship lending in explaining simultaneously the innovation activity of Small and Medium Enterprises (SME), their probability to export (i.e. the extensive margin) and their share of exports on total sales conditional on exporting (i.e. the intensive margin). We adopt a measure of informational tightness based on the ratio of firm’s debt with its main bank to firm’s total assets. Our results show that the strength of the bank-firm relation has a positive impact on both SME’s probability to export and their export margins. This positive effect is only marginally mediated by the SME’s increased propensity to introduce product innovation. We further discuss the financial and non-financial channels through which the intensity of bank-firm relationship supports SMEs’ international activities.
    Keywords: margins of export, bank-firm relationships, innovation, localized knowledge spillovers.
    JEL: F10 G20 G21 O30
    Date: 2014–10
  24. By: Hill, Hal (Arndt-Corden Department of Economics); Menon, Jayant (Asian Development Bank)
    Abstract: ASEAN has significant achievements to its credit. It is a durable and effective functioning entity, more so than any other regional organization in the developing world. For a region characterized by great diversity and a history of conflict, ASEAN has played a role in delivering relative peace and stability in the region, which has in turn facilitated rapid economic development. Yet ASEAN has not progressed very far in terms of becoming a formal economic entity. But its own brand of market-driven and institution-light regionalism has served it well. The ASEAN-6 countries have undertaken several waves of multilateralizing preferences, ensuring global connectedness. Looking forward, hopefully the new members will follow suit, and this approach towards open regionalism will be preserved with the move to an ASEAN Economic Community.
    Keywords: ASEAN; open regionalism; multilateralization of preferences; FTA
    JEL: F13 F14 F17
    Date: 2014–11–01

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