The Effect of Joining Free Trade Union on Export and Import in ASEAN Countries

Abstract

Free Trade is important stage in increasing country’s exports and imports. One form of free trade is ASEAN Free Trade Area (AFTA) which established in 1992 and has 10 member countries. In contrast, there are previous studies that state free trade can also have negative impacts on trade between countries. This study tries to analyze the relationship of AFTA on exports and imports of its member countries using data from World Bank period 1985 to 2015. The analysis uses random effect and dynamic panel model. Dynamic panel models are used to determine the short-run and long-run relationship of AFTA on export and import. The result shows that there are positive and significant effects of AFTA to exports and imports of ASEAN Member States (AMS). The result obtained on the long-run show a greater influence between AFTA and AMS international trade.