Quantitative impacts of alternative East Asia free trade areas: a CGE assessment

Kitwiwattanachai, Anyarath (2008) Quantitative impacts of alternative East Asia free trade areas: a CGE assessment. PhD thesis, University of Nottingham.

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Abstract

The aim of this thesis is to make a comprehensive assessment and comparison of the quantitative economic impacts at both the domestic and the international level of four alternative FTA options in East Asia - ASEAN-China, ASEAN-Japan, ASEAN-Korea and East Asia - by using a static multi-region, multi-sector CGE model as a tool. With two main extensions to the "standard" CGE model in this study - the introduction of unemployment and the incorporation of highly disaggregated household data (Thailand is a case study) - the analysis is enhanced on the issues of labour markets and poverty and the income distribution.

The model results show that trade liberalisation could alleviate real wage inequality in countries abundant in unskilled labour, i.e. China and ASEAN. In contrast, real wage inequality worsens in Japan and Korea, where skilled labour is relatively abundant. The unemployment feature incorporated in the model gives quantitative predictions of both lower unemployment and higher real wages. In general, under a regional agreement - East Asia FTA - member countries would enjoy higher economic welfare gains than under any of the bilateral agreements - ASEAN-China FTA, ASEAN-Japan FTA or ASEAN-Korea FTA.

When focusing on poverty and income distribution effects in Thailand, the model results at the national level suggest that all the trade liberalisation options will alleviate the poverty problem in Thailand, but that the degree of poverty reduction will vary depending upon the implemented policy. The poverty in the poorest community (villages), and in the poorest region (the Northeast) improves the most from the East Asia FTA. On the other hand, trade liberalisation, under all options,does not have a major impact on income disparity in Thailand. Sensitivity tests indicate that these results are robust.

However, such an "ideal" regional agreement might be deterred by the different strategies of other East Asia nations and by the uneasy relationship between China and Japan, reflecting their economic and political differences.

Item Type:Thesis (PhD)
Supervisors:Reed, G.V.
Nelson, D.R.
Uncontrolled Keywords:Computable General Equilibrium, Free Trade Area, Trade liberalisation, East Asia, Poverty and Income Distribution, Thailand.
Faculties/Schools:UK Campuses > Faculty of Social Sciences, Law and Education > School of Economics
ID Code:489
Deposited By:Anyarath Kitwiwattanachai
Deposited On:27 Jun 2008
Last Modified:06 Feb 2009 14:43

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