The Effect of Regionalism and Infrastructure on Bilateral Trade: An Augmented Gravity Analysis for ASEAN

Abstract

This paper estimates the effects of regionalism in South East Asia (AFTA), infrastructure, economic size, distance, and common border on the ASEAN trade flows. The trade flow evolutions of 97 ASEAN’s partner during 1990–2000 are considered in the analysis through the utilization of cross-sectional and panel gravity model. The results show that as a symbol of regionalism in ASEAN, the coefficient of AFTA and infrastructure are positively significant in affecting the ASEAN trade flows for most periods. The other determinants, i.e. economic size (income), and distance affect significantly the ASEAN trade flows. However, common border is found to have no effect on ASEAN trade.