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Are Preferential Agreements Stepping Stones To Other Markets?

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Abstract

This paper investigates whether preferential trade agreements (PTA) promote exports to third nations through the expansion of the extensive margin (i.e. larger number of export goods). The analysis covers 11 South- South and South-North PTAs involving 36 countries that exported to 118 different destinations during the 5 years before and after the PTA. Using a conditional logit model, and trade data at the SITC 5-digit level, we estimate the effect of new within-PTA exports on the subsequent exports to thirdnation markets. The results suggest that PTAs have a positive indirect effect, i.e. spillover-effect, on exports to third countries. Previous export experience in a given product in the preferential area is shown to have a positive effect on the probability that the same product is subsequently exported to a nonmember market. The size of the effect, however, varies across PTAs.

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Bibliographic Info

Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 13-2010.

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Length: 29 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:gii:giihei:heidwp13-2010

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Keywords: Trade policy; spillovers; market entry;

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References

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  1. Jan De Loecker, 2004. "Do Exports Generate Higher Productivity? Evidence from Slovenia," LICOS Discussion Papers 15104, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  2. Van Biesebroeck, Johannes, 2005. "Exporting raises productivity in sub-Saharan African manufacturing firms," Journal of International Economics, Elsevier, vol. 67(2), pages 373-391, December.
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Cited by:
  1. Lili Wang & Yong Zhao, 2013. "Does Experience Facilitate Entry into New Export Destinations?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 21(5), pages 36-59, 09.
  2. Fabrice Defever & Benedikt Heid & Mario Larch, 2011. "Spatial Exporters," CESifo Working Paper Series 3672, CESifo Group Munich.
  3. Facundo Albornoz & Hector Calvo-Pardo & Gregory Corcos & Emanuel Ornelas, 2010. "Sequential Exporting," CEP Discussion Papers dp0974, Centre for Economic Performance, LSE.
  4. Ornelas, Emanuel, 2012. "Preferential Trade Agreements and the Labor Market," CEPR Discussion Papers 8805, C.E.P.R. Discussion Papers.
  5. Céline CARRERE & Vanessa STRAUSS-KAHN, 2012. "Exports Dynamics: Raising Developing Countries Exports Survival through Experience," Working Papers P35-A, FERDI.
  6. Paul Brenton & Olivier Cadot & Martha Denisse Pierola, 2012. "Pathways to African Export Sustainability," World Bank Publications, The World Bank, number 9380, August.

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