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Preferential Trade Agreements in Asia: Alternative Scenarios of "Hub and Spoke"

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  • Zhai, Fan

    (Asian Development Bank)

Abstract

The proliferation of preferential trade agreements in Asia may result in a number of hub-and-spoke configurations, with the Association of Southeast Asian Nations, People's Republic of China, and Japan competing as regional hubs of bilateral free trade areas. Using a newly developed global computable general equilibrium model with imperfect competition, increasing returns to scale, and heterogeneous firms, the paper explores the potential economic effects of alternative hub-and-spoke configurations in Asia. Simulation results suggest that the regionalism approach to integration in the Asian context can hardly act as a building block of global trade liberalization, if it is confined to shallow integration only. However, regional trade agreements involving deep integration measures provide a promising path toward global free trade.

Suggested Citation

  • Zhai, Fan, 2006. "Preferential Trade Agreements in Asia: Alternative Scenarios of "Hub and Spoke"," ADB Economics Working Paper Series 83, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0083
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    More about this item

    Keywords

    preferential trade agreements; Asia; hub-and-spoke configurations; global trade liberalization; computable general equilibrium model;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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