Ex Post Analysis of ASEAN-5 Free Trade Area Comparison of the Asian and Global Crisis: The Implementation of the Gravity Model 1998-2018

Abstract

This research aims to analyze the effects of a free trade agreement on whether it will lead to trade creation or trade diversion as seen from the flow of exports in ASEAN 5 countries including Indonesia, Malaysia, Thailand, Philippines, and Singapore by using the gravity model. This study use quantitative research with secondary data and is estimated with a panel data with the dependent variable is exports of the country origin and destination, while the independent variables are income of the country of origin or GDP, destination country income, a distance between countries, populations of countries of origin, populations of countries of destination, the similarity of languages, and land borders for 21 years from 1998 to 2018, which are divided into two equations of two phenomena that are considered to influence export variables as a dependent, namely post-Asian crisis (1998-2008) and post-global crisis (2009-2018). The results of this study are evidenced by some significant variable values that are considered affect export flows and it can be concluded that the existence of a free trade agreement will create trade creation and a crisis can also affect the rate of trade flows seen in the export curve in 1998 and 2009. The majority of countries in the study experienced a decline when the crisis occurred.