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Deep Integration: Free trade agreements heterogeneity and its impact on bilateral trade

Author

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  • Jaime Ahcar

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)

  • Jean-Marc Siroën

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

Regional trade agreements (RTAs) have surgedin a context of stalled multilateral trade negotiations. Their impact on international trade and on development have been well documented while scant attention have been paid to empirical studies exploring their heterogeneity in the scope of deep integration. We intend in this paper to determine if deeper RTAs promote trade more effectively than less ambitious agreements. We proceed to generate credible indicators of deep integration exploiting two recently available data sets from the World Trade Organization (WTO) and the World Trade Institute (WTI), and then we test their significance in a gravity model for International Trade.Treating additive indicators as factor variables, as well as our innovative use of Multiple Correspondence Analysis MCA to get distilled indicators of deep integration allowed us to givenew insight and to confirm recent findings on the field of deep integration.We find that deeper agreements increase trade more than shallow ones, whereas the provisions they include are within or outside of the WTO domain. Therefore, if we accept the hypothesis that trade liberalization contribute to a better allocation of resources, then trade policy makers should favour deeper RTAs to enhance economic development.

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  • Jaime Ahcar & Jean-Marc Siroën, 2015. "Deep Integration: Free trade agreements heterogeneity and its impact on bilateral trade," Post-Print hal-01485694, HAL.
    • Handle: RePEc:hal:journl:hal-01485694
    Note: View the original document on HAL open archive server: https://hal.science/hal-01485694
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    References listed on IDEAS

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    1. Vincent Vicard, 2009. "On trade creation and regional trade agreements: does depth matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 167-187, July.
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    4. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    5. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
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    7. Baier, Scott L. & Bergstrand, Jeffrey H. & Feng, Michael, 2014. "Economic integration agreements and the margins of international trade," Journal of International Economics, Elsevier, vol. 93(2), pages 339-350.
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    Cited by:

    1. Ahcar, Jaime & Siroën, Jean-Marc, 2017. "Deep Integration: Considering the Heterogeneity of Free Trade Agreements," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 32(3), pages 615-659.
    2. Julie Lochard, 2016. "Intégration et échanges internationaux : effets contemporains et persistants," Erudite HDR / Erudite Accreditation to supervise Ph.D., Erudite, number hd16-01 edited by Jean-François Jacques, June.

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    More about this item

    Keywords

    Deep integration; gravity model; regional trade agreements; trade liberalization; international trade; economic development;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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