My hypotheses are the following:
H1: The more FTAs are ratified between ASEAN members and non-ASEAN members, the more increase in trade volume and production within ASEAN.
H2: The more FTAs are ratified between ASEAN members and non-ASEAN members, the more increase in foreign direct investment in ASEAN.
H3: The more …show more content…
To do so, I will utilize the computable general equilibrium (CGE) model for trade policy analysis. This is the best model to analyze trade policies’ structural and productivity effects; it can also analyze micro and macroeconomic variables such as productivity gains, net national savings, overall employment, and implications of trade policies (Petri & Plummer, 2016). CGE model is beneficial in order to analyze the impact of FTAs at a macroeconomic level and industries at a microeconomic level (Ando & Urata, 2006). Moreover, using CGE models is advantageous since they are based on consistent structural equations that describe the economic activity of each nation (Kawai & Wignaraja,