Regional Cooperation and Bilateral Trade Flows: An Empirical Measurement of Resistance

    Research output: Contribution to journalArticle

    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
    JournalInternational Trade Journal
    Volume21
    Issue number2
    DOIs
    Publication statusPublished - 2007

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