Ji Won Lee (p), Jinhwan Oh

Roni Golan

This study examines the effectiveness of regional trading blocs in Southeast Asia. Over the years, the Association of Southeast Asian Nations (ASEAN) has engaged in various agreements to position, secure, and widen the scope of regional integration to promote economic and social development. As part of that effort, ASEAN formed plus groups with other countries, such as ASEAN3, ASEAN6, and AANZFTA. These groups have enabled East Asian countries—both Southeast and Northeast Asian countries—to cooperate and negotiate their shared interests and concerns. To confirm the importance of regional economic blocs and analyze their effectiveness, this study applies the gravity model of trade to comprehensive panel data from the ASEAN’s 10 member-countries, covering 17 years of activity with their 29 major trading partners. This study finds that limiting the trading bloc to 10 countries is suboptimal and shows that adding six members (Australia, China, India, Japan, New Zealand, and South Korea) to the bloc—a configuration formally known as ASEAN Plus Six or ASEAN6—improves the trading bloc’s effectiveness. In addition, the analysis indicates that ASEAN member-country export volumes to Plus Six members will be 2.5 to 4 times higher than to non-members. In the latter portions of this paper, the policy implications of these findings are discussed.

Roni Golan (p)

Ji Won Lee

In order to decrease the objection to redevelopment initiatives, policy-makers frequently adopt measures that offer economic incentives—such as additional property rights—to homeowners on the land intended for redevelopment. However, the period between the announcement of the intention to redevelop and the implementation of the new construction often extends over a long time period. This study uses a game-theoretic framework to examine the effect of the incentives to redevelop on the quality of the existing housing stock during the extended pre-implementation period. We show that the option to redevelop may accelerate deterioration. Moreover, we identify circumstances under which there exists a unique Nash equilibrium where, in order to discourage objections of other homeowners, those who support redevelopment intentionally lead to structure deterioration during the pre-redevelopment period. Our results highlight the need to shorten the time-period between the adoption of a policy intended to encourage redevelopment and the implementation of redevelopment.

Ji Won Lee (p), Jinhwan Oh

Roni Golan

Despite Sri Lanka being an interesting case as the first South Asian country to have liberalized its economy, few studies have empirically examined Sri Lanka’s trade patterns. Most of the existing studies examine Sri Lanka’s international trade experience and Sri Lanka’s bilateral trade with India. This study empirically examines Sri Lanka’s international trade pattern by analyzing a panel dataset of the country’s bilateral trade flows with 204 countries for 21 years (1995-2016). This is examined by using two sets of regressions to analyze the collected data: panel random effect with the lagged variables and instrumental regression with Two-Stage-Least-Squares (2SLS). The empirical results generally supported the prediction of the gravity model, in which the variables GDP and per capital GDP have positive coefficients while distance has negative coefficients. When the data was examined by calculating the difference between the estimated and actual values of exports and imports, it was found that Sri Lanka’s export flow with the Asian countries – China and Nepal – was undermined. Thus, Sri Lanka should redirect its exporting activities to China and Nepal. For imports, trade with the following countries: Thailand, Nepal, Bhutan, Laos, Vietnam, Philippines, Myanmar and Cambodia were undermined. Therefore, it is suggested that Sri Lanka diversify its trading activities with the identified countries.