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Journal of Economic Integration 1999 September;14(3) :347-367.
DOI: https://doi.org/10.11130/jei.1999.14.3.347
A Gravity Model Analysis of the Benefits of Economic Integration in the Pacific Rim

David Karemera Wilbur I. Smith Kalu Ojah John A. Cole 

South Carolina State University
Florida A&M University
Saint Louis University
Benedict College
Copyright ©1999 Journal of Economic Integration
ABSTRACT
A modified gravity model of international trade is used to evaluate determinants of flows of commodities most often traded in the Pacific Rim. It is shown that the gravity model can be reparameterized effectively by using time series and cross section data rather than using cross section data alone. Documented evidence indicates that all independent variables including income, export and import unit values, exchange rates, and membership in regional trade groups are major determinants of trade flows in the Pacific Rim. Specifically, member ship in the ASEAN significantly increased trade creation among members as well as fostered trade diversion from members to nonmembers. However, the impact of membership in the NAFTA on trade flows in the Pacific Rim is limited and appears to be commodity specific. (JEL Classifications: F15, F14, F02)
Keywords: pacific rim | economic integrationl | generalized gravity mode | ASEAN | NAFTA
 
REFERENCE
1. Wonnacottt, Ronald and Paul Wonnacott [1982], "Free Trade between United States and Canada: 15 Years Later," Canadian Public Policy Supplement, October.
2. UN, International Trade Statistics Yearbook, Statistical Division, United Nations, New York, Various Issues.
3. Hsiao, C. [1986], Analysis of Panel Data, Cambridge University Press, New York.
4. Koo, Won W., Ihn H. Uhm, and Joel Golz [1991], "Bilateral Trade Relationship between the United States and Canada: Implications of Free Trade Agreement," Contemporary Policy Issues, January; pp. 56-69.
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