For this research, I will utilize the theory presented by Spolaore and Wacziarg (2005) that finds that “(i) country size and openness are positively related to higher income per capita in steady-state (and hence higher growth in the transition to the steady-state), and (ii) other things equal, the effect of size is larger for countries with higher barriers to trade (and, hence, lower openness), while the effect of higher barriers and lower openness is bigger for smaller countries.” In essence, market size affects growth and income levels, and depends on both the degree of openness of the economy and country size. This theory examines how endogenous country size is determined by trade liberalization and how trade and country size influences economic growth as well as the relationship between political borders and growth (Liu, 2016).
My hypotheses are the following:
H1: The more FTAs are ratified between ASEAN members and non-ASEAN members, the more increase in trade volume and production within ASEAN.
H2: The more FTAs are ratified between ASEAN members and non-ASEAN members, the more increase in foreign direct investment in ASEAN.
H3: The more FTAs are ratified between ASEAN members and non-ASEAN members, there will be a decrease in trade restrictions. The independent variables are the number of free trade agreements between ASEAN members and non-ASEAN members for H1, H2, and H3. The dependent variables are increase in trade volume and production within ASEAN for H1, increase in foreign direct investment in ASEAN for H2, and decrease in trade restrictions for H3. IV. Research Design This paper will take a mixed-methods methodology by utilizing both qualitative and quantitative approaches. As for the qualitative methodology, case studies will be conducted on the existing FTA between ASEAN members (AFTA) and FTAs between ASEAN members and non-ASEAN members (ex. ASEAN-Japan, ASEAN-China, ASEAN-Australia-New Zealand, ASEAN-South Korea, etc.). Also, there will be an economic, political, and geopolitical analysis of ASEAN. By conducting historical and content analysis of ASEAN Free Trade Area (AFTA) and three FTAs between ASEAN members and non-ASEAN members, it will be possible to see how their transformations and the increase of FTAs has elicited change within ASEAN as well as the change in trade restrictions throughout the years. Moreover, interviews will be conducted with economic officials from the ASEAN members and non-ASEAN members engaged in FTAs as well as officials working in ASEAN and Asian Development Bank. The selected case studies will be conducted through process-tracing of secondary sources, and interviews will be analyzed through the NVivo data analysis software. More importantly, it is imperative to assess the effectiveness and impact of FTAs through empirical data and quantitative methodology. …show more content…
To do so, I will utilize the computable general equilibrium (CGE) model for trade policy analysis. This is the best model to analyze trade policies’ structural and productivity effects; it can also analyze micro and macroeconomic variables such as productivity gains, net national savings, overall employment, and implications of trade policies (Petri & Plummer, 2016). CGE model is beneficial in order to analyze the impact of FTAs at a macroeconomic level and industries at a microeconomic level (Ando & Urata, 2006). Moreover, using CGE models is advantageous since they are based on consistent structural equations that describe the economic activity of each nation (Kawai & Wignaraja, 2010). Generally, the CGE model and database of the Global Trade Analysis Project (GTAP) find that FTA members retain welfare gains through trade creation whereas non-members suffer welfare losses because of trade diversion (Estrada et al., 2011). By applying the CGE model, I can derive the economic output and welfare effects of the FTAs and see how it affects the enhancement of ASEAN’s trade volume. My sample size will be 50 FTAs between ASEAN nations and non-ASEAN nations from the period of 2005-2015, and it will test the effects of trade liberalization, production volume, investment facilitation, FDI flow, etc. for each FTA. Through empirical testing, we can compare the effects between bilateral FTAs between ASEAN members and non-ASEAN members. Based on the results, I will analyze the current policies of Asian regional institutions, and address the gap in the policies that need to be revised or strengthened in order to facilitate
My hypotheses are the following:
H1: The more FTAs are ratified between ASEAN members and non-ASEAN members, the more increase in trade volume and production within ASEAN.
H2: The more FTAs are ratified between ASEAN members and non-ASEAN members, the more increase in foreign direct investment in ASEAN.
H3: The more FTAs are ratified between ASEAN members and non-ASEAN members, there will be a decrease in trade restrictions. The independent variables are the number of free trade agreements between ASEAN members and non-ASEAN members for H1, H2, and H3. The dependent variables are increase in trade volume and production within ASEAN for H1, increase in foreign direct investment in ASEAN for H2, and decrease in trade restrictions for H3. IV. Research Design This paper will take a mixed-methods methodology by utilizing both qualitative and quantitative approaches. As for the qualitative methodology, case studies will be conducted on the existing FTA between ASEAN members (AFTA) and FTAs between ASEAN members and non-ASEAN members (ex. ASEAN-Japan, ASEAN-China, ASEAN-Australia-New Zealand, ASEAN-South Korea, etc.). Also, there will be an economic, political, and geopolitical analysis of ASEAN. By conducting historical and content analysis of ASEAN Free Trade Area (AFTA) and three FTAs between ASEAN members and non-ASEAN members, it will be possible to see how their transformations and the increase of FTAs has elicited change within ASEAN as well as the change in trade restrictions throughout the years. Moreover, interviews will be conducted with economic officials from the ASEAN members and non-ASEAN members engaged in FTAs as well as officials working in ASEAN and Asian Development Bank. The selected case studies will be conducted through process-tracing of secondary sources, and interviews will be analyzed through the NVivo data analysis software. More importantly, it is imperative to assess the effectiveness and impact of FTAs through empirical data and quantitative methodology. …show more content…
To do so, I will utilize the computable general equilibrium (CGE) model for trade policy analysis. This is the best model to analyze trade policies’ structural and productivity effects; it can also analyze micro and macroeconomic variables such as productivity gains, net national savings, overall employment, and implications of trade policies (Petri & Plummer, 2016). CGE model is beneficial in order to analyze the impact of FTAs at a macroeconomic level and industries at a microeconomic level (Ando & Urata, 2006). Moreover, using CGE models is advantageous since they are based on consistent structural equations that describe the economic activity of each nation (Kawai & Wignaraja, 2010). Generally, the CGE model and database of the Global Trade Analysis Project (GTAP) find that FTA members retain welfare gains through trade creation whereas non-members suffer welfare losses because of trade diversion (Estrada et al., 2011). By applying the CGE model, I can derive the economic output and welfare effects of the FTAs and see how it affects the enhancement of ASEAN’s trade volume. My sample size will be 50 FTAs between ASEAN nations and non-ASEAN nations from the period of 2005-2015, and it will test the effects of trade liberalization, production volume, investment facilitation, FDI flow, etc. for each FTA. Through empirical testing, we can compare the effects between bilateral FTAs between ASEAN members and non-ASEAN members. Based on the results, I will analyze the current policies of Asian regional institutions, and address the gap in the policies that need to be revised or strengthened in order to facilitate