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.
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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)
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