Abstract
Taiwan and Association of Southeast Asian Nations (ASEAN) do not have any diplomatic ties, but they have enjoyed significantly economic benefits, especially bilateral investment and trade cooperation. Over the period 2000–2017, trade between Taiwan and ASEAN had significantly focused on manufactured goods embodied with high-skill and technology-intensive content. Using gravity model with a PPML (Poisson pseudo-maximum-likelihood) estimator, this article explores determinants of bilateral trade flows between them at both aggregate and sectoral levels. We found that economic scale and per capital income of ASEAN have much stronger effects than those of Taiwan at both aggregate trade and the degree of manufacturing. Results also show that bilateral trade between Taiwan and ASEAN has been efficiently performed over recent decades, except for cases of Myanmar and Cambodia. Hence, a dynamic approach should be taken by both sides to promote bilateral trade relations in future.
Highlights
Prior enlarging as the whole regional organization in 1999, Association of Southeast Asian Nations (ASEAN) countries inherently occupied an important role in Taiwan’s foreign economic strategy
There is a consecutive tendency of trade surplus in favor of Taiwan that would partly reduce real benefit ASEAN countries could enjoy from the fast expansion of bilateral trade with Taiwan
This current paper explores that there is a high concentration on high-skill and technology-intensive goods, especially electronic and electrical products in Taiwan–ASEAN trade
Summary
Prior enlarging as the whole regional organization in 1999, Association of Southeast Asian Nations (ASEAN) countries inherently occupied an important role in Taiwan’s foreign economic strategy. The development of technology and deep economic integration in East Asia economies have facilitated the delivery of goods between Taiwan and ASEAN, but physical distance still plays an important role in trade pattern between two regions.
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