Evaluating the trade effect of developing regional trade agreements : a semi-parametric approach
AbstractMany recent papers have pointed to ambiguous trade effects of developing regional trade agreements (RTAs), calling for a reassessment of their economic merits. The author focuses on seven such agreements currently in force in Sub-Saharan Africa (ECOWAS and SADC), Asia (AFTA and SAPTA) and Latin America (CACM, CAN, and MERCOSUR), estimating their impacts on their members'trade flows. Instead of the usual dummy variables for RTAs, he proposes a variable taking into account the number of years of membership. He then combines a gravity model with kernel estimation techniques to capture the non-monotonic trade effects while imposing minimal structure on the model. The results indicate that except for SAPTA, these RTAs have had a positive impact on their members'intra-trade over the estimation period (1960-99). AFTA seems to be the most successful among them, with an estimated positive impact on its members'imports from the rest of the world (hence no trade diversion), but its impact on their exports to the rest of the world is rather limited. During its first 10 years of existence, ECOWAS appears to have had a positive impact on its members'imports from the rest of the world (hence no trade diversion), but this positive impact vanished over time. SAPTA's negative impact on its members'intra-trade is probably an implicit effect of the India-Pakistan tensions over the estimation period.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4220.
Date of creation: 01 May 2007
Date of revision:
Free Trade; Trade Law; Trade Policy; Economic Theory&Research; Trade and Regional Integration;
Other versions of this item:
- Coulibaly, Souleymane, 2009. "Evaluating the Trade Effect of Developing Regional Trade Agreements: a Semi-parametric Approach," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 24, pages 709-743.
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F15 - International Economics - - Trade - - - Economic Integration
- O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
This paper has been announced in the following NEP Reports:
- NEP-AFR-2007-05-04 (Africa)
- NEP-ALL-2007-05-04 (All new papers)
- NEP-CWA-2007-05-04 (Central & Western Asia)
- NEP-INT-2007-05-04 (International Trade)
- NEP-SEA-2007-05-04 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rose, Andrew K, 2004.
"Does the WTO Make Trade More Stable?,"
CEPR Discussion Papers
4246, C.E.P.R. Discussion Papers.
- Philippa Dee & Jyothi Gali, 2005.
"The Trade and Investment Effects of Preferential Trading Arrangements,"
in: International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14, pages 133-176
National Bureau of Economic Research, Inc.
- Philippa Dee & Jyothi Gali, 2003. "The Trade and Investment Effects of Preferential Trading Arrangements," NBER Working Papers 10160, National Bureau of Economic Research, Inc.
- Carrere, Celine, 2006. "Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model," European Economic Review, Elsevier, vol. 50(2), pages 223-247, February.
- Lucian Cernat, 2001. "ASSESSING REGIONAL TRADE ARRANGEMENTS: ARE SOUTH–SOUTH RTAs MORE TRADE DIVERTING?," International Trade 0109001, EconWPA.
- James E. Anderson & Eric van Wincoop, 2003.
"Gravity with Gravitas: A Solution to the Border Puzzle,"
American Economic Review,
American Economic Association, vol. 93(1), pages 170-192, March.
- James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
- James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
- Anne O. Krueger, 1999. "Trade Creation and Trade Diversion Under NAFTA," NBER Working Papers 7429, National Bureau of Economic Research, Inc.
- Caroline L. Freund & John McLaren, 1999. "On the dynamics of trade diversion: evidence from four trade blocs," International Finance Discussion Papers 637, Board of Governors of the Federal Reserve System (U.S.).
- Bierens,Herman J., 1996. "Topics in Advanced Econometrics," Cambridge Books, Cambridge University Press, number 9780521565110, October.
- Baldwin, Richard & Taglioni, Daria, 2006.
"Gravity for Dummies and Dummies for Gravity Equations,"
CEPR Discussion Papers
5850, C.E.P.R. Discussion Papers.
- Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
- I-Hui Cheng & Howard J. Wall, 2005.
"Controlling for heterogeneity in gravity models of trade and integration,"
Federal Reserve Bank of St. Louis, issue Jan, pages 49-63.
- I-Hui Cheng & Howard J. Wall, 2004. "Controlling for heterogeneity in gravity models of trade and integration," Working Papers 1999-010, Federal Reserve Bank of St. Louis.
- Robert J. R. Elliott & Kengo Ikemoto, 2004.
"AFTA and the Asian Crisis: Help or Hindrance to ASEAN Intra-Regional Trade?,"
Asian Economic Journal,
East Asian Economic Association, vol. 18(1), pages 1-23, 03.
- R J R Elliott & K Ikemoto, 2003. "AFTA and the Asian Crisis: Help or Hindrance to ASEAN Intra-Regional Trade?," The School of Economics Discussion Paper Series 0311, Economics, The University of Manchester.
- Festus Ebo Turkson, . "Using Observable Trade Data to Measure Bilateral Trade Costs in Sub-Saharan Africa," Discussion Papers 12/06, University of Nottingham, CREDIT.
- Festus Ebo Turkson, . "Trade Agreements and Bilateral Trade in Sub-Saharan Africa: Estimating the Trade Effects of the EU-ACP PTA and RTAs," Discussion Papers 12/07, University of Nottingham, CREDIT.
- Jean-Marc Siroën & Aycil Yucer, 2012.
"The impact of MERCOSUR on trade of Brazilian states,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 148(3), pages 553-582, September.
- Jean-Marc Siroën & Aycil Yucer, 2011. "The Impact of MERCOSUR on Trade of Brazilian States," Working Papers DT/2011/07, DIAL (Développement, Institutions et Mondialisation).
- Siroën, Jean-Marc & Yücer, Aycil, 2012. "The Impact of MERCOSUR on Trade of Brazilian States," Economics Papers from University Paris Dauphine 123456789/7077, Paris Dauphine University.
- Afesorgbor, Sylvanus Kwaku & van Bergeijk, Peter A.G., 2011. "Multi-membership and effectiveness of regional trade agreements in Western and Southern Africa: a comparative study of ECOWAS and SADC," Proceedings of the German Development Economics Conference, Berlin 2011 1, Verein für Socialpolitik, Research Committee Development Economics.
- FE, Doukouré Charles, 2010.
"Réduction de Droits de Douane et Convergence Réelle dans l'UEMOA
[Tariffs Reduction and Real Convergence in WAEMU]," MPRA Paper 26763, University Library of Munich, Germany.
- World Bank, 2012. "Reshaping Economic Geography of East Africa : From Regional to Global Integration, Volume 2. Technical Annexes," World Bank Other Operational Studies 11916, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.