The impact of preferential trade agreements on world trade: the case of ASEAN

Trade has been an important dimension since time immemorial. The Oriental economic thought in-specific that of Hebrews and Hindus have condemned exports of essential goods and stocking them up in times of famines. There by documenting the existence of trade. The views of Aristotle and Plato on existence of nation states and their importance influenced their opinion on commercial relations and banned trade in precious metals or any other form of trade which in their opinion was mean way to attain livelihood. The Roman's have their own view point on the same, trade existed but was regulated. But it was the Mercantilist's who formally propagated the cause of trade which was induced from wealth accumulation or the concept of treasure (Haney, 2005).

ASEAN is the major trade block in Asia thus the paper has the following objectives: First, to analyse Intra ASEAN trade and its effect on the world trade along with the factors which influence the trade between ASEAN and World. Second, to analyse whether there exists any long term relationship between the intra ASEAN trade and its bilateral trade with World. Thirdly How much are ASEAN member countries trading among themselves. The time period is 1995–2010. The period coincides with the peak of Asian miracle and its downfall too. Along with this there have been various significant events like the attack on world trade centre, Afghanistan war, Iraq war, Sub-prime crisis etc. The paper is empirical in nature and uses apt econometric techniques.