Analysis of Japan-Thailand Free Trade Agreement using Asian International Input-Output Model

Wilairat Tongsiri and Prof. Hiroyuki Kosaka, Keio University, Tokyo

From the International Input-Output Association's (IIOA) website. Input-Output Economics provides one way of assessing the impact of regional economic cooperation. This field was invented by Nobel Prize winner Wassily Leontief [Memorial, Wikipedia].

Abstract: "Since September 2005, Japan and Thailand have agreed upon establishing Japan-Thailand Economic Partnership Agreement (JTEPA). The agreement, mainly, focuses on setting up free trade between the two nations. Specifically, Japan would be grated tariff reduction on automobiles, auto parts, and iron and steel products. On the other hand, Thailand would gain market assess to Japan in textile and agricultural products, mainly fruits, vegetables, prepared or preserved chicken and pork, and fishery products. (excluding rice wheat, and sugar) Even though the agreement on tariff reduction was sector-specific rather than across the board, the impact of the free trade agreement would fall upon various sectors. The model that considering interaction among sectors has become essential, hence, input output model turned out to be appropriate tool for this type of analysis. Moreover, this bilateral trade agreement has not only impacted on Japan and Thailand economy, but also affected other Asian countries. Therefore, international input-output table becomes a powerful mechanism for analyzing the issue. The model framework could be termed as international input-output model, basing on Asian International Input Output Table developed by Institute of Developing Economies, Tokyo. The Asian international input-output model consists of 24-sector time series input-output table in 1985, 1990, 1995, and 2000, scoping on China, Japan, Korea Taiwan, Singapore, Malaysia, Indonesia, Thailand, Philippines and the United States.