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N° 119 |
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| Issue 3 2009 |
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A Factor Analysis of Trade Integration:
the Case of Asian and Oceanic Economies |
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Yin-Wong Cheung
Matthew S. Yiu
Kenneth K. Chow |
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| We study trade integration among fifteen selected Asian and Oceanic economies using factor models. The principal component approach is employed to extract the common factor that drives trade integration from bilateral trade integration series. It is found that the estimated common trade integration factor has strong seasonal and deterministic components. In accordance with theory, the common trade integration factor is significantly associated with the economic growth and the trade barriers of the fifteen economies. However, we find no evidence that the common trade integration factor is affected by foreign direct investment. The basic model is extended to incorporate an ASEAN factor that affects trade integration among the ASEAN economies in our sample. |
Abstract
Full Text |
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| Factor model; principal component; growth; trade barriers; ASEAN |
Keywords |
| F15; F36; F42 |
JEL classification |
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Order form |
