Regional cooperation and bilateral trade flows: An empirical measurement of resistance

Kaliappa Kalirajan*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

72 Citations (Scopus)

Abstract

Drawing on the procedures developed for estimating stochastic frontier production functions, the methodology suggested in this paper to work out the impact of country-specific resistance to bilateral trade flows between two countries is the estimation of a stochastic frontier gravity type model. The workability of the suggested method is demonstrated using trade data from the recently formed Indian Ocean Rim - Association for Regional Cooperation (IOR-ARC) countries. The role of the regional cooperation towards reducing trade restrictiveness among its member countries is examined by considering Australia's exports to other member countries of IOR-ARC. The empirical analysis indicates that on average, Australia has been able to achieve more (about 15%) of its potential exports with IOR-ARC countries due to regional cooperation.

Original languageEnglish
Pages (from-to)85-107
Number of pages23
JournalInternational Trade Journal
Volume21
Issue number2
DOIs
Publication statusPublished - Apr 2007
Externally publishedYes

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