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The Impact of Preferential Trade Agreements on the Margins of International Trade

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Author Info

  • Neil Foster-McGregor

    ()
    (The Vienna Institute for International Economic Studies, wiiw)

  • Johannes Pöschl

    ()
    (The Vienna Institute for International Economic Studies, wiiw)

  • Robert Stehrer

    ()
    (The Vienna Institute for International Economic Studies, wiiw)

Abstract

In this paper we consider the trade creating effects of Preferential Trade Agreements (PTAs) for a large sample of countries over the period 1960-2000. The paper builds upon the existing literature by examining whether any significant effects of PTAs occur through a change in the variety of exports (i.e. the extensive margin) or through a change in the volume of existing products (the intensive margin). To address this issue we employ the commonly used gravity equation as well as a matching approach to deal with potential self-selection problems. Our results indicate that exports respond positively to the formation of a PTA between countries, and that much of this increase in exports occurs along the extensive margin. We also show that the gains are strongest for larger trading partners, with again much of the benefits occurring along the extensive margin.

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Bibliographic Info

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 70.

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Length: 25 pages including 9 Tables
Date of creation: Sep 2010
Date of revision:
Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:70

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Keywords: preferential trade agreements; intensive and extensive margin; matching; difference-in-difference;

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References

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Citations

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Cited by:
  1. Alessandro Nicita & Valentina Rollo, 2013. "Tariff Preferences As A Determinant For Exports From Sub-Saharan Africa," UNCTAD Blue Series Papers 60, United Nations Conference on Trade and Development.
  2. Alessia Amighini & Marco Sanfilippo, 2013. "Impact of South-South FDI and trade on the export upgrading of African economies," RSCAS Working Papers 2013/75, European University Institute.
  3. Dick Nuwamanya Kamuganga, 2012. "What Drives Africa's Export Diversification?," IHEID Working Papers 15-2012, Economics Section, The Graduate Institute of International Studies.
  4. Yue Gao & John Whalley & Yonglei Ren, 2013. "Decomposing China's Export Growth into Extensive Margin, Export Quality and Quantity Effects," CESifo Working Paper Series 4251, CESifo Group Munich.
  5. Balasan, Andrei-Cristian, 2012. "Literature review concerning the relationship between globalization and regionalization in the world economy," MPRA Paper 39746, University Library of Munich, Germany.

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