Journal of Korea Trade

Korea Trade Research Association (한국무역학회)
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The Impact of the Regional Comprehensive Economic Partnership (RCEP) on Intra-Industry Trade: An Empirical Analysis Using a Panel Vector Autoregressive Model

  • Guofeng Zhao (Graduate School of International Studies, Dong-A University) ;
  • Cheol-Ju Mun (Department of International Trade, Business School, Dong-A University)
  • Received : 2023.03.22
  • Accepted : 2023.06.09
  • Published : 2023.06.30
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Abstract

Purpose - This study aims to examine the dynamic relationship between the variables impacted by the Regional Comprehensive Economic Partnership (RCEP) and the level of intra-industry trade among member states, with the ultimate objective of deducing the short- and long-term effects of RCEP on trade. Design/methodology - This study focuses on tariffs, GDP growth rates, and the proportion of regional FDI to total FDI as research variables, and employs a panel vector autoregression model and GMM-style estimator to investigate the dynamic relationship between RCEP and intra-industry trade among member countries. Findings - The study finds that the level of intra-industry trade between member states is positively impacted by both tariffs and intra-regional FDI. The impulse response graph shows that tariffs and FDI within the region can promote intra-industry trade among member countries, with a quick response. However, the contribution rates of tariffs and intra-regional FDI are not particularly high at approximately 1.5% and 1.4%, respectively. In contrast, the contribution rate of GDP growth can reach around 8.5%. This implies that the influence of economic growth rate on intra-regional trade in industries is not only long-term but also more powerful than that of tariffs and intra-regional FDI. Originality/value - The originality of this study lies in providing a new approach to investigating the potential impact of RCEP while avoiding the limitations associated with the GTAP model. Additionally, this study addresses existing gaps within the research, further contributing to the research merit of the study.

Keywords

Acknowledgement

This work was supported by the Dong-A University.

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