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The Impact of Intra Regional Trade Agreement on FDI Inflows in Southeast Asia: Case of Indonesia, Malaysia and Thailand

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  • Verico, Kiki

Abstract

This study attempts to analyze the impact of intra regional trade agreement on FDI inflows in Southeast Asia. The agreement is ASEAN Free Trade Area (AFTA). The observed countries are Indonesia, Malaysia and Thailand. These three countries have been selected based on several considerations. Trade indicators of Revealed Comparative Advantage (RCA), Constant Market Share Analysis (CMSA) and Net Export (NX) show these three countries have intra trade advantage in primary products. These indicators are useful to assess how effective AFTA in accommodating her member’s trade advantage products into her priority products list. Furthermore this study attempts to assess the impact of AFTA on FDI inflows as a proxy of its effectiveness on investment. This study adopts econometric model of Panel Data Analysis on both the Static Fixed Effects and Dynamic Panel Data (DPD) Analysis to find the impact of AFTA and other variables to FDI inflows.

Suggested Citation

  • Verico, Kiki, 2012. "The Impact of Intra Regional Trade Agreement on FDI Inflows in Southeast Asia: Case of Indonesia, Malaysia and Thailand," MPRA Paper 42087, University Library of Munich, Germany, revised 20 Oct 2012.
    • Handle: RePEc:pra:mprapa:42087
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    Cited by:

    1. Kiki Verico, 2020. "How to Measure Bilateral Economic Relations? Case of Indonesia – Australia," LPEM FEBUI Working Papers 202056, LPEM, Faculty of Economics and Business, University of Indonesia, revised 2020.
    2. Salucknai Outtanasith & Khaysy Srithilat, 2022. "The Impact of AFTA on Trade Openness, and Foreign Direct Investment: The Empirical Evidence from Lao PDR," International Journal of Science and Business, IJSAB International, vol. 16(1), pages 142-152.

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    More about this item

    Keywords

    Trade; Neoclassical Models of Trade; Long-Term Capital (FDI inflows); AFTA; Asian Economic Crisis;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F1 - International Economics - - Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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