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Indonesian Trade Under China Free Trade Area

Author

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  • Tavi Supriana

Abstract

This paper investigates the implementation of CAFTA (China-Asean Free Trade Area) on the international trade flows across Indonesia, China and the rest of ASEAN using a gravitation model. It finds the evidence that the influence of diversion and creation effects on China are significant, while the influence of both effects on Indonesia are not significant. It also finds that the diversion effect, which leads to a decrease in society’s wealth, is greater than that of the creation effect. As a consequence, the gap across countries involved in the trade agreement is wider. Keywords: CAFTA, gravitation model, diversion effect, creation effectJEL classification numbers: F13, F14, F15

Suggested Citation

  • Tavi Supriana, 2011. "Indonesian Trade Under China Free Trade Area," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 3(2), pages 139-151.
    • Handle: RePEc:uii:journl:v:3:y:2011:i:2:p:139-151:id:2326
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    File URL: https://journal.uii.ac.id/JEP/article/view/2326/2124
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    More about this item

    Keywords

    cafta; gravitation model; diversion effect; creation effectjel classification numbers: f13; f14; f15;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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