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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. De Loecker, Jan, 2007. "Do exports generate higher productivity? Evidence from Slovenia," Journal of International Economics, Elsevier, vol. 73(1), pages 69-98, September.
  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. Facundo Albornoz & Hector F. Calvo Pardo & Gregory Corcos & Emanuel Ornelas, 2010. "Sequential Exporting," Discussion Papers 10-08, Department of Economics, University of Birmingham.
  2. Ornelas, Emanuel, 2012. "Preferential trade agreements and the labour market," ILO Working Papers 469183, International Labour Organization.
  3. Paul Brenton & Olivier Cadot & Martha Denisse Pierola, 2012. "Pathways to African Export Sustainability," World Bank Publications, The World Bank, number 9380, January.
  4. Fabrice Defever & Benedikt Heid & Mario Larch, 2011. "Spatial Exporters," CEP Discussion Papers dp1100, Centre for Economic Performance, LSE.

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