Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model

The main purpose of this study is to empirically examine the trade linkages among ASEAN countries with existing of AFTA using gravity model. To achieve the objectives, the multivariate relationship between the trade flows and the four macroeconomic variables are tested through multivariate Johans...

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Main Author:	Goh, Lim Thye
Format:	Thesis
Language:	English English
Published:	2002
Subjects:	Free ports and zones - Malaysia - Economic aspects - Case studies
Online Access:	http://psasir.upm.edu.my/id/eprint/8318/1/FEP_2002_16_IR.pdf
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id	my-upm-ir.8318
record_format	uketd_dc
spelling	my-upm-ir.83182024-01-05T08:07:55Z Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model 2002-08 Goh, Lim Thye The main purpose of this study is to empirically examine the trade linkages among ASEAN countries with existing of AFTA using gravity model. To achieve the objectives, the multivariate relationship between the trade flows and the four macroeconomic variables are tested through multivariate Johansen cointegration tests and multivariate Granger causality tests based on VECM and also the Impulse Response Function are applied to capture the dynamic linkages among the macroeconomic variables. Annual data covering the period from 1965 to 2000 was utilized in this study. The ASEAN countries concerned in this study are Indonesia, Malaysia, Philippines, Singapore and Thailand. The empirical results of this study indicates that the macroeconomics variables as concerned by Erkkila-Widgren and Meronen gravity model are found to be significantly cointegrated for both export flows and import flows of Malaysia within the ASEAN countries in long run. However, in short run the evidences of the Granger causality between trade flows and macroeconomic variable IS only significant determinant in certain countries as proven by multivariate Granger causality test based on VECM Under the impulse response function framework, dynamic linkages between Malaysian trade flows and macroeconomic variables are identified. The results indicate that APTA and population are positively cointegrated with Malaysian trade flows, whereas GDP per capital of the observed ASEAN countries and distance are negatively co integrated with Malaysia trade flows. This study thus implies that an efficient trade agreement in ASEAN region will promote a better performance of a country's trade flows. This in turn will create more employment opportunities and stimulate economic growth. Free ports and zones - Malaysia - Economic aspects - Case studies 2002-08 Thesis http://psasir.upm.edu.my/id/eprint/8318/ http://psasir.upm.edu.my/id/eprint/8318/1/FEP_2002_16_IR.pdf text en public masters Universiti Putra Malaysia Free ports and zones - Malaysia - Economic aspects - Case studies Faculty of Economics and Management Tan, Hui Boon English
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English English
advisor	Tan, Hui Boon
topic	Free ports and zones - Malaysia - Economic aspects - Case studies
spellingShingle	Free ports and zones - Malaysia - Economic aspects - Case studies Goh, Lim Thye Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model
description	The main purpose of this study is to empirically examine the trade linkages among ASEAN countries with existing of AFTA using gravity model. To achieve the objectives, the multivariate relationship between the trade flows and the four macroeconomic variables are tested through multivariate Johansen cointegration tests and multivariate Granger causality tests based on VECM and also the Impulse Response Function are applied to capture the dynamic linkages among the macroeconomic variables. Annual data covering the period from 1965 to 2000 was utilized in this study. The ASEAN countries concerned in this study are Indonesia, Malaysia, Philippines, Singapore and Thailand. The empirical results of this study indicates that the macroeconomics variables as concerned by Erkkila-Widgren and Meronen gravity model are found to be significantly cointegrated for both export flows and import flows of Malaysia within the ASEAN countries in long run. However, in short run the evidences of the Granger causality between trade flows and macroeconomic variable IS only significant determinant in certain countries as proven by multivariate Granger causality test based on VECM Under the impulse response function framework, dynamic linkages between Malaysian trade flows and macroeconomic variables are identified. The results indicate that APTA and population are positively cointegrated with Malaysian trade flows, whereas GDP per capital of the observed ASEAN countries and distance are negatively co integrated with Malaysia trade flows. This study thus implies that an efficient trade agreement in ASEAN region will promote a better performance of a country's trade flows. This in turn will create more employment opportunities and stimulate economic growth.
format	Thesis
qualification_level	Master's degree
author	Goh, Lim Thye
author_facet	Goh, Lim Thye
author_sort	Goh, Lim Thye
title	Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model
title_short	Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model
title_full	Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model
title_fullStr	Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model
title_full_unstemmed	Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model
title_sort	impact of afta on malaysian trade flows: an empirical analysis based on gravity model
granting_institution	Universiti Putra Malaysia
granting_department	Faculty of Economics and Management
publishDate	2002
url	http://psasir.upm.edu.my/id/eprint/8318/1/FEP_2002_16_IR.pdf
_version_	1794018739833798656

Impact of AFTA on Malaysian Trade Flows: An Empirical Analysis Based on Gravity Model

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