THE EFFECT OF AFTA ON INDONESIA'S TRADE

This paper aims to analyze the volume of Indonesia�s trade with its other ASEAN member countries, especially after the implementation of ASEAN Free Trade Area (AFTA). In particular, this paper uses the gravity model of trade to estimate the effect of implementation of AFTA. The ordinary least square, fixed effect method, random effect method, and Hausman�Taylor will be used to analyze panel data of five ASEAN member countries from year 1980 to 2009. The estimation shows that the implementation of AFTA is not determinant of Indonesia�s trade with other ASEAN member countries