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What Is The Cause Of Growth In Regional Trade: Trade Liberalization Or Rta'S? The Case Of Agriculture

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Author Info

  • Diao, Xinshen
  • Roe, Terry L.
  • Somwaru, Agapi

Abstract

This paper delves into the debate on the proliferation of regional trade arrangements by focusing on bilateral agricultural trade data over the 1962-1995 period for countries that currently are members of NAFTA, Mercosur, the EU and APEC. Agricultural is chosen because it has historically been protected by developed and dis-protected by developing nations, while in the case of the EU, its Common Agricultural Policy was the major policy jointly managed and funded by member countries. We suggest that the literature has tended to focus on factors explaining the level of trade, and neglected factors affecting growth in trade. While neighborhood characteristics affect neighborhood trade, they also appear to affect the policy regimes of neighboring countries. The shift to more outward oriented regimes is thus likely to induce a dynamic in trade among neighboring countries requiring several years to stabilize. As neighborhood trade grows, it is natural to form trade arrangements so as to harmonize policies and to remove other barriers. If this is the case, then we should expect the growth in intra regional trade to exceed growth in extra-regional trade, and these patterns should occur before the formation of regional trade arrangements. Our results support this explanation.

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Bibliographic Info

Paper provided by International Agricultural Trade Research Consortium in its series Working Papers with number 14605.

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Date of creation: 1999
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Handle: RePEc:ags:iatrwp:14605

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Related research

Keywords: International trade; Regional trade arrangements; Agricultural trade; International Relations/Trade;

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References

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  1. Alexis Jacquemin & André Sapir, 1988. "European integration or world integration?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 124(1), pages 127-139, March.
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  3. Robert Feenstra, 2003. "Integration Of Trade And Disintegration Of Production In The Global Economy," Working Papers 986, University of California, Davis, Department of Economics.
  4. repec:fth:eeccco:94 is not listed on IDEAS
  5. André Sapir, 1992. "Regional integration in Europe," ULB Institutional Repository 2013/8200, ULB -- Universite Libre de Bruxelles.
  6. Gopinath, Munisamy & Arnade, Carlos & Shane, Mathew & Roe, Terry, 1997. "Agricultural competitiveness: The case of the United States and major EU countries," Agricultural Economics, Blackwell, vol. 16(2), pages 99-109, May.
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  9. Shang-Jin Wei & David C. Parsley, 1995. "Purchasing Power Disparity During the Floating Rate Period: Exchange Rate Volatility, Trade Barriers and Other Culprits," NBER Working Papers 5032, National Bureau of Economic Research, Inc.
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Cited by:
  1. Roe, Terry L. & Shane, Mathew & Somwaru, Agapi, 2006. "Exchange Rates, Foreign Income and U.S. Agriculture," Bulletins 12975, University of Minnesota, Economic Development Center.
  2. Sampath Jayasinghe & Rakhal Sarker, 2004. "Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data," Food and Agricultural Policy Research Institute (FAPRI) Publications 04-wp374, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  3. Colyer, Dale, 2001. "Impacts Of Nafta On U.S.-Mexico Agricultural Trade," Conference Papers 19105, West Virginia University, Department of Agricultural Resource Economics.
  4. Sampath Jayasinghe & Rakhal Sarker, 2004. "Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data," Center for Agricultural and Rural Development (CARD) Publications 04-wp374, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  5. Shane, Mathew & Roe, Terry L. & Somwaru, Agapi, 2008. "Exchange Rates, Foreign Income, and U.S. Agricultural Exports," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), October.
  6. Doan, Darcie & Goldstein, Andrew & Zahniser, Steven & Vollrath, Thomas L. & Bolling, H. Christine, 2004. "North American Integration In Agriculture: A Survey Paper," North American Agrifood Integration: Situation and Perspectives, May 2004, Cancun, Mexico 16730, Farm Foundation.

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