Kengoay. Pdf

---

 

1

AFTA and the Asian Crisis: Help or Hindrance to ASEAN 

Intra -Regional Trade? 

 

Robert J. R. Elliott** and Kengo Ikemoto* 

 

 

 

 

 

 

 

 

 

 

 

 

 

Keywords: trade, gravity equation, ASEAN 

JEL: F1, F14 

 

**Robert J. R. Elliott is a Lecturer in Economics in the School of Economic Studies, 

University of Manchester. 

*Kengo Ikemoto is a former Research Student in the Institute for Development  Policy 

and Management, University of Manchester and now works for the Cabinet Office of 

the Government of Japan. 

---

 

2

AFTA and the Asian Crisis: Help or Hindrance to ASEAN 

Intra -Regional Trade? 

 

Abstract 

 

Using a modified gravity equation, this paper examines  ASEAN intra- and 

extra-regional bias in bilateral trade flows and how these relationships have altered 

over time.  We pay particular attention to the periods before and after the signing of 

AFTA as well as the crucial years prior to and following the Asian crisis.  Given the 

“openness” of ASEAN countries we consider not only intra-ASEAN trade but also the 

effect of AFTA on non- members.  We find that trade flows were not significantly 

affected in the years immediately following the signing of the AFTA agreement and 

also that the traditional stance of ASEAN countries to outward oriented economic 

activity has not been significantly damaged but rather stimulated by the AFTA 

process and/or the Asian economic crisis.  We do find however, that that one effect 

of the Asian economic crisis was to generate a stronger desire to source imports from 

within the region. 

 

 

---

 

3