The Effect of the Establishment of the AEC on the Internal Trade in the ASEAN Region

Abstract

This paper attempts to examine the impact of the launch of the AEC on ASEAN intra-regional trade using structural change tests based on the gravity model. The main conclusions of this paper are as follows: the above test using panel data among ASEAN member countries shows that the intra-regional trade of ASEAN has changed to a structure that is less sensitive to the distance between member countries and the nominal GDP of each member country after the launch of the AEC. The results also show that this structural change occurred significantly after 2015, which is consistent with the fact that the AEC was launched in December 2015. These results suggest that the inauguration of the AEC was a factor that stimulated intra-regional trade in ASEAN without depending on the economic size of the ASEAN member countries or the distance between them as much as before.