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Recent literature has emphasized the importance of transaction costs andinfrastructure in explaining trade, acces to markets, and regional cooperationunder globalization. For most Asian countries, transaction costs are a greaterbarrier to trade integration than import tariffs. By estimating a structural modelof economic geography using cross-country data on income, infrastructure,transaction costs and trade of selected Asian economies, this paper shows that thetransaction costs is statistically significant and important determinant inexplaining variation in trade in Asia. JEL classification: F02, F10, F15