The Impact of Various Trade Arrangements on Malaysia’s Bilateral Trade Costs

The Impact of Various Trade Arrangements on Malaysia’s Bilateral Trade Costs. Jurnal Ekonomi Malaysia, 52 (2). pp. 69-80. ISSN 2716-6058 (2018)


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.

Item Type: Article
Keywords: Trade costs, trade arrangement
Taxonomy: By Subject > Business & Management > Economics
Local Content Hub: Subjects > Business & Management
Depositing User: Eza Eliana Abdul Wahid
Date Deposited: 01 Aug 2021 13:48
Last Modified: 01 Aug 2021 13:48
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