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The Impact of South-South Preferential Trade Agreements on Industrial Development: An Empirical Test

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  • Volpe Martincus, Christian

    ()
    (Inter-American Development Bank)

  • Siedschlag, Iulia

    (Economic and Social Research Institute, Dublin)

Abstract

Preferential trade agreements could lead to a reallocation of resources across sectors and countries. Production patterns resulting from North-North regional integration initiatives have been documented in several studies. However, empirical evidence on South-South trade agreements is limited. The purpose of this paper is to fill this gap in the empirical literature by looking at the effects of the establishment of MERCOSUR on manufacturing production patterns in Argentina, Brazil, and Uruguay over the period 1985-1998. We find that deepened preferential trade liberalization has fostered a reshaping of manufacturing production structures according to regional comparative advantage in labor and skilled labor. Furthermore, declining internal tariffs have weakened agglomeration forces determined by the distribution of market sizes. By using GMM estimation techniques, we ensure that these results are robust to endogeneity and serial correlation.

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Bibliographic Info

Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 25 (2010)
Issue (Month): ()
Pages: 69-104

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Handle: RePEc:ris:integr:0497

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Web page: http://econo.sejong.ac.kr/
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Related research

Keywords: preferential trade liberalization; production patterns; MERCOSUR;

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Citations

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Cited by:
  1. Demir, Firat & Dahi, Omar S., 2012. "Preferential Trade Agreements and Manufactured Goods Exports: Does It Matter Whom You PTA With?," MPRA Paper 37396, University Library of Munich, Germany.
  2. Von Uexkull, Erik, 2012. "Regional trade and employment in ECOWAS," ILO Working Papers 468791, International Labour Organization.
  3. Fugazza, Marco & Robert-Nicoud, Frédéric, 2006. "Can South-South trade Liberalisation Stimulate North-South Trade ?," Journal of Economic Integration, Center for Economic Integration, Sejong University, Center for Economic Integration, Sejong University, vol. 21, pages 234-253.
  4. Christian Volpe Martincus & Iulia Traistaru, 2004. "Economic Integration And Manufacturing Concentration Patterns: Evidence From Mercosur," Royal Economic Society Annual Conference 2004, Royal Economic Society 163, Royal Economic Society.
  5. Alessia Lo Turco, 2005. "South-South Trade Agreements, Location of Production and Inequality in Latin America," Ibero America Institute for Econ. Research (IAI) Discussion Papers 127, Ibero-America Institute for Economic Research.

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