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Jurnal Ekonomi Malaysia

52 (2) 2018 69 – 80

The Impact of Various Trade Arrangements on Malaysia’s Bilateral Trade Costs
Kesan Pelbagai Perjanjian Perdagangan terhadap Kos Perdagangan Dua Hala Malaysia

Faculty of Economics and Management
Universiti Putra Malaysia
43400 Serdang, Selangor
MALAYSIA

woei85@gmail.com

Faculty of Economics and Management
Universiti Putra Malaysia
43400 Serdang, Selangor
MALAYSIA

leechin@upm.edu.my

Faculty of Economics and Management
Universiti Putra Malaysia
43400 Serdang, Selangor
MALAYSIA

azali@upm.edu.my

Faculty of Economics and Management
Universiti Putra Malaysia
43400 Serdang, Selangor
MALAYSIA
and
Institute of Agricultural and Food Policy Studies
Universiti Putra Malaysia
43400 Serdang Selangor
MALAYSIA

nwi@upm.edu.my

Abstract

The benefits of trade agreements on trade activities are notably acknowledged but the impact on bilateral trade costs remains obscure and have to be further examined. First, this study will construct the micro measure of bilateral trade cost, and then the constructed trade costs will be utilized to estimate the impact of trade arrangements on trade costs for Malaysia and her trading partners for the year 2002-2012. The results show that all four types of trade arrangements, namely the Multilateral Trade Arrangement (MTA), Regional Trade Arrangement (RTA), Bilateral Free trade Arrangement (BFTA) and bilateral trade Arrangement (BTA) have lowered trade costs. In addition, the different
types of trade arrangements result in a variation of trade costs, where regional trade arrangements are expected to reduce bilateral trade costs the most. However empirical result shows otherwise where BFTA gave the highest reduction in trade costs for Malaysia. As to date, the number of BFTA that has been signed is far behind BTA. It is recommended that Malaysia realign its focus towards BFTA with the hope that Malaysia and her trading partners will experience a greater reduction of trade costs in the coming years.

Keywords

trade arrangement; Trade costs

Author’s Acknowledgement

Financial support from the Ministry of Higher Education Malaysia through Fundamental Research Grant Scheme (Project Reference No. FRGS/1/2015/SS08/UPM/02/10) is gratefully acknowledged.

http://dx.doi.org/10.17576/JEM-2018-5202-6
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Woei, , Chin, , Mohamed, , & Ismail, N. W. (2018). The Impact of Various Trade Arrangements on Malaysia’s Bilateral Trade Costs. Jurnal Ekonomi Malaysia, 52(2), 69–80. http://dx.doi.org/10.17576/JEM-2018-5202-6

@article{woei2018impact,
  title={The Impact of Various Trade Arrangements on Malaysia’s Bilateral Trade Costs},
  author={Woei, Tan Jiunn and Chin, Lee and Mohamed, Azali and Ismail, Normaz Wana},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={2},
  pages={69—80},
 

year={2018},
}

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