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	Table of Contents
p. 74 of 81 BACK | NEXT I. Developing Asia and the World II. Economic Trends and Prospects in Developing Asia III. Preferential Trade Agreements in Asia and the Pacific Overview Trends in Trade and the Expansion of PTAs: Trends in World and Asian Trade Flows Diversity in of PTAs The Economic and Broader Effects of PTAS: Theoretical Arguments Effects of PTAs on Trade in Asia and the Pacific: Some Evidence Trends in Intrabloc Trade Trade Intensity Indices Gravity Model Estimation Beyond Gravity Models: Computable General Equilibrium Models Conclusions References

Asian Development Outlook 2002 : III. Preferential Trade Agreements in Asia and the Pacific : Effects of PTAs on Trade in Asia and the Pacific: Some Evidence

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Trade Intensity Indices

Frankel (1997) notes a limitation in comparing trade shares across PTAs to consider the trade-distorting effects of PTAs, namely that the intrabloc trade share tends to be higher the larger the size of the PTA. Trade concentration ratios or trade intensity indices overcome the limitation of intrabloc trade shares as measures of trade distortion by dividing the intraregional trade share by the share of the region to total world trade. If the ratio is one, the intraregional trade share is the same as the trade share of the region with the world. In this case, the PTA has a neutral effect on trade. If the trade intensity index is greater (less) than one, then there is trade diversion (creation) as a result of the PTA. Analysis of 5-year averages of the intensity indices for 11 PTAs from 1980 to 2000 shows that indices are greater than one (Table 3.10). The bigger PTAs (e.g., APEC, EU, and NAFTA) have indices close to one while smaller PTAs generally have larger indices. Interestingly, the Andean Pact and Mercosur trade blocs have the highest trade intensities, an observation also reported by Frankel (1997). The Asian PTAs tend to have lower trade intensities. AFTA members appear to have become more outward oriented and the intensity index figures fell steadily in the 1990s.

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