Assessment of the ASEAN–Korea FTA: findings on ASEAN-5 manufacturing and high-tech exports

Abstract

Purpose: The ASEAN–Korea Free Trade Agreement (FTA) was signed in 2006 and took effect the following year. This research seeks to determine whether the implementation of the ASEAN–Korea FTA has been satisfactory for ASEAN-5 total and high-tech manufactured exports. Design/methodology/approach: Manufacturing export flows between the ASEAN-5 and Korea are analyzed using the synthetic control method. This approach allows us to develop a counterfactual unit for manufacturing exports in a scenario in which no FTA would have been implemented. Findings: Our results reveal that the ASEAN–Korea FTA has had a significantly positive impact on manufactured exports from the ASEAN-5 countries, both at the country and aggregate levels. Furthermore, it is observed that this positive outcome has also held for high-tech manufactured exports. Originality/value: This research expands the literature in the field of trade agreement evaluation. Given the important economic implications of high-tech exports, this paper assesses the consequences that the ASEAN–Korea FTA has for such manufactured ASEAN exports. Moreover, this research studies whether the synthetic indicator is a good predictor of exports for the period before the FTA, analyzing the stochastic properties of the difference between these variables.