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Do Hub-and-Spoke Free Trade Agreements Increase Trade? A Panel Data Analysis

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Author Info

  • Alba, Joseph

    () (Nanyang Technological University)

  • Hur, Jung

    () (Sogang University)

  • Park, Donghyun

    () (Asian Development Bank)

Abstract

We use panel data consisting of 96 countries and covering the period 1960–2000 to investigate the effects of free trade agreements (FTAs) and hub-and-spoke systems of FTAs on exports. Our empirical results imply an annual growth rate of 5.57% in exports, leading to a doubling of exports after 12.4 years, between FTA partners. Non-overlapping FTAs account for 4.12%, while hub-and-spoke FTAs account for 1.45% of the estimated export growth rate. This indicates that in addition to the direct trade liberalizing effect of FTAs, the hub-and-spoke nature of FTAs has an additional positive effect on trade.

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File URL: http://aric.adb.org/pdf/workingpaper/WP46_Hub_and_Spoke_Free_Trade.pdf
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Bibliographic Info

Paper provided by Asian Development Bank in its series Working Papers on Regional Economic Integration with number 46.

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Length: 32 pages
Date of creation: 01 Apr 2010
Date of revision:
Handle: RePEc:ris:adbrei:0046

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Keywords: free trade agreement; hub and spoke; world bilateral trade data; panel data analysis; fixed effect; average treatment effect;

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