The Effect Of Trade Specialization And Institutional Quality On Intra-Asean Trade
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Date
2017-06
Authors
A. Bakar, Norhayati
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
Intra-ASEAN trade is stagnant at 20% to 25% for the past few decades. This is partly because ASEAN members are overl-reliant on non-ASEAN countries for their exports. Several suggestions have been put forward such as exchange rates and trade agreement which observed so far as having limited effect to increase intra-ASEAN trade. In this study, we propose and examine the role of trade specialization and the quality of institutions among ASEAN for a period between 1996 and 2015. ASEAN countries are generally endowed with similar resources have a tendency to compete with each other for similar products. Specialization in certain production, while leaving the other members to produce is theoretically helpful to promote trade among ASEAN. In other development, ASEAN countries are also in general suffer serious problem of poor institutional quality which involved among others corruption, political instability and so on. This situation is hypothesized in this study as having deterrent effect on intra-ASEAN. Therefore, this study focuses on and examines the role of both as potential solutions to low intra-ASEAN trade. Fixed-effect model is employed to examine the model considering the limited sample size of this study. The results suggest that trade specialization and quality of institution are significant and crucial to promote bilateral trade among ASEAN countries. Hence, continous promotion of both factors may help to improve intra-trade and eventually capable in strengthening regional integration.
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Keywords
The effect of trade specialization and institutional , quality on intra-asean trade