Regional bias and intra-regional trade in southeast Asia

Abstract

Southeast Asia exhibits a bias towards intra-regional trade but not one that is out of line with the size, growth rates and geographical proximity of these countries; there is more trade bias than exhibited by the EU but less than that of NAFTA and, unlike in the EU and NAFTA, southeast Asian trade bias has not increased in recent years. Tests using a gravity model of trade confirm the importance of economic size, geographic distance and common language in intra-region bilateral trade and also show that re-exports and membership of ASEAN have been important factors promoting intra-regional trade.