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Trade Creation, Replacement, and Destruction in Regional Trade Agreements: Micro-level Evidence for the UK

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Author Info

  • Sourafel Girma
  • Richard Kneller
  • Mauro Pisu

Abstract

Empirical questions surrounding the effect of regional trade agreements on international trade have typically been answered with reference to macro-level gravity equations. Prominent within this has been whether they create or divert trade. In this paper, motivated by the recent development of theories of export-platform FDI, we use micro-level data to explore the part of trade diversion that follows from FDI. Using information on acquisition FDI in the UK manufacturing sector between 1988 and 1998 we find evidence of trade creation, replacement, and destruction from FDI external and internal to the EU. Copyright � 2008 The Authors; Journal compilation � 2008 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 16 (2008)
Issue (Month): 1 (02)
Pages: 142-158

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Handle: RePEc:bla:reviec:v:16:y:2008:i:1:p:142-158

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576

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Cited by:
  1. Ahmed, Saira & Ahmed, Vaqar & Sohail, Safdar, 2010. "Trade agreements between developing countries: a case study of Pakistan - Sri Lanka free trade agreement," MPRA Paper 29209, University Library of Munich, Germany.

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