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Geopolitical Interests And Preferential Access To U.S. Markets

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  • DANIEL LEDERMAN
  • ÇAGLAR ÖZDEN

Abstract

The United States imports around 25% of its merchandise under some form of preferential trade regime. This paper examines both the origins and the consequences of U.S. trade preferences in the context of the gravity model of international trade. The main contributions of the paper are threefold. First, it provides estimates of the impact of preferential trade regimes in terms of access to U.S. markets while controlling for geostrategic interests that determine the countries that are offered commercial preferences. Second, we consider not only country eligibility but also the extent of utilization of these programs. Third, we provide new estimates of the impact of transport and transactions costs beyond distance. In the standard gravity estimation, we find that beneficiaries of these preferences, except GSP, export between two and three times more than the excluded countries, after controlling for country and product characteristics. Nonetheless, the estimated effects of these programs are lower when controlling for utilization ratios and selection biases due to the correlation between geopolitical interests and the standard explanatory variables used in the gravity model of trade, such as countries' geographic distance from the United States. Copyright 2007 Blackwell Publishing Ltd..

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  • Daniel Lederman & Çaglar Özden, 2007. "Geopolitical Interests And Preferential Access To U.S. Markets," Economics and Politics, Wiley Blackwell, vol. 19(2), pages 235-258, July.
  • Handle: RePEc:bla:ecopol:v:19:y:2007:i:2:p:235-258
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    Cited by:

    1. Hinz, Julian, 2017. "The ties that bind: Geopolitical motivations for economic integration," Kiel Working Papers 2085, Kiel Institute for the World Economy (IfW).
    2. 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.
    3. Bernhard Herz & Marco Wagner, 2011. "The Dark Side of the Generalized System of Preferences," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 763-775, September.
    4. Emily Blanchard & Xenia Matschke, 2015. "U.S. Multinationals and Preferential Market Access," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 839-854, October.
    5. Calì, Massimiliano & te Velde, Dirk Willem, 2011. "Does Aid for Trade Really Improve Trade Performance?," World Development, Elsevier, vol. 39(5), pages 725-740, May.
    6. Pham, Cong S. & Lovely, Mary E. & Mitra, Devashish, 2014. "The home-market effect and bilateral trade patterns: A reexamination of the evidence," International Review of Economics & Finance, Elsevier, vol. 30(C), pages 120-137.
    7. Cooke, Edgar F. A., 2012. "Is the impact of AGOA heterogeneous?," MPRA Paper 43277, University Library of Munich, Germany.
    8. Carlos Felipe Jaramillo & Daniel Lederman & Maurizio Bussolo & David Gould & Andrew Mason, 2006. "Challenges of CAFTA : Maximizing the Benefits for Central America," World Bank Publications, The World Bank, number 7127.
    9. Cooke, Edgar F. A., 2011. "A matching approach to study the impact of agoa on Sub-Saharan African countries," MPRA Paper 34670, University Library of Munich, Germany.

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