Abstract
This study aims to determine the effects of ASEAN economic integration on the manufacturing sector's trade flow and foreign direct investment. This study using panel data regression. The results show that ASEAN economic integration affects trade in the manufacturing sector and foreign direct investment (FDI) in ASEAN member countries. The tariff elimination policy increased trade flows in the manufacturing sector and foreign direct investment. The variable of GDP has a positive and significant effect on the manufacturing sector's trade flows and foreign direct investment. Exchange rate variables have a negative and significant effect on trade flows in the manufacturing sector and foreign direct investment. Meanwhile, the distance variable negatively affects trade in the manufacturing sector, but it does not affect foreign direct investment.
Highlights
Economic globalization refers to the economy's integration process and is interrelated to the world economy nationally, regionally, and locally
This study aims to determine the effects of ASEAN economic integration on the manufacturing sector's trade flow and foreign direct investment (FDI)
A degree of openness is represented by economic integration, which employs the proxy ratio between the aggregate value of imports and exports and Gross Domestic Product (GDP). These calculations on the gravity model are utilized to determine the effect of gross domestic product (GDP), economic distance (DIST), real effective exchange rates (REER), economic openness (OPEN), and before and after the implementation of the ASEAN Free Trade Area (AFTA) on trade flow of manufacturing sector and FDI
Summary
Economic globalization refers to the economy's integration process and is interrelated to the world economy nationally, regionally, and locally. Economic globalization covers the international flow of goods, services, and capital, tariff reduction, trade barriers, immigration, technology exchanges, and cross-border knowledge (Samimi & Jenatabadi, 2014). Economic globalization is marked by the increasing welcomes to international trade, encouraging market competition that generates an efficient market by lowering production costs, driving creativity and innovation to create various products (Yulisa, 2017). As part of a community globally, Indonesia is actively involved in various economic cooperations to open the access and remove the trade barriers (Damuri, 2006). Economic globalization implicates the international trade system of goods and services by eliminating trade barriers, such as tax reduction, trade quotas, as well as subsidy (Krugman & Obstfeld, 2003). The trade barriers elimination induces industrial activity efficiency and opens access that can develop and expand the market. International trade flow in both goods and services is certainly developed
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Jurnal Perspektif Pembiayaan dan Pembangunan Daerah
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
