Regional blocs and agricultural trade flow: The case of ASEAN

Abstract

The direction of the agricultural trade flow compared with the total trade flow can exhibit different patterns. In this study, total and agricultural trade flows for Indonesia, Malaysia, Philippines, and Thailand were examined employing a gravity model and utilizing cross section data. The results show that income and population are significant and positive in all cases while ASEAN has a facilitating impact on the agricultural trade flow in general. Although the distance variable is negative and significant for total trade flow, it is not significant in some cases for the agricultural trade flow. Given the fact that the population has a tendency to increase and income rises with the process of globalization, increasing trade flow can be expected in the region over time. Trade facilitating measures such as harmonization of regulations and an appropriate marketing mix towards partner countries will increase the trade flow in the region.