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ISSN : 1738-3110

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Vol.10 No.12

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How APEC Affects the Intra-trade of Members: An Empirical Study

The Journal of Distribution Science / The Journal of Distribution Science, (P)1738-3110; (E)2093-7717
2012, v.10 no.12, pp.13-17
https://doi.org/https://doi.org/10.15722/jds.10.12.201212.13
Lee, Donghae
Lee,, D. (2012). How APEC Affects the Intra-trade of Members: An Empirical Study. The Journal of Distribution Science, 10(12), 13-17, https://doi.org/https://doi.org/10.15722/jds.10.12.201212.13

Abstract

Purpose - The Asia-Pacific Economic Cooperation (APEC) forum has evolved and is actively facilitating free and open trade. It is debated whether APEC has effectively reduced trade barriers in a preferential manner to encourage liberalized trade and whether increased trade between member countries has reduced trade with nonmember countries. Research designs, data, methodology -This paper empirically tests whether APEC creates or diverts trade, using an extended gravity model with tariff rates, exchange rates, and dummy variables to analyze how APEC affects intra-trade between members.The model utilizes the annual panel data between 1990 and 2007 of 16 selected APEC members and nonmembers. Results - Results reveal the changing role of APEC only between 2002 and 2007 has it created trade, fostering increased trade among trading partners and between members and nonmembers. Conclusion - APEC can be expected to demonstrate a stronger trade creating effect once its advanced and developing members complete tariff reductions by 2010 and 2020, respectively.

keywords
APEC, Trade Creation &amp, Trade Diversion, Gravity Model, Panel Estimation

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