Abstract:
The purpose of this thesis is to analyze the economic factors that effect the opportunity in establishing FTA and what kinds of economic characteristics can lead to the forming of FTA. The coincidences between characteristic of the high FTA forming opportunity pair countries and the conditions which FTA tend to have the trade creation rather than trade diversion for proving that the high FTA forming probability countries obtain the welfare improving after the economic integration are also estimated. Additionally, the FTA of Thailand and major trading partners is also studied to evaluate the consistency between Thailands FTA strategy and estimated result from model. Finally, the predicted aftermaths of establishing FTA between Thailand and all trading countries are also analyzed in this thesis. The analytical result indicates that the key economic factors influencing the probability in forming FTA between trading partner countries are distance between countries, economic size of trading partners, similarity in term of GDP per capita between countries, different level of endowments between trading partners and trading volume between countries. Additionally, the estimating results in forming FTA between trading countries from economical model demonstrate that most countries having high opportunity to form the FTA are the pair countries which tend to have trade creation rather than trade diversion. We can also conclude that after forming FTA countries tend to obtain increasing welfare. In the case of Thailand, the result shows that Thailand has high probability to form FTA with adjacent countries, countries that have only slightly difference in GDP per capita with Thailand or large economical sizing countries such as China, Japan, Korea and India. It also can be seen from this research that Thailand and trading partners seem to have welfare improving although the benefit is unequal in the short run, but both countries will acquire equally high benefit in the long run. This result is also consistent with Thai FTA strategy.