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On the trade-diversion effects of free trade agreements

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Listed author(s):
  • Dai, Mian
  • Yotov, Yoto V.
  • Zylkin, Thomas

Abstract

Trade-diversion effects of free trade agreements (FTAs) have not been thoroughly examined empirically. Using a novel empirical approach, we confirm that FTAs divert trade away from non-member countries and even more so from internal trade (domestic sales) in member countries.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165176513005636
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 122 (2014)
Issue (Month): 2 ()
Pages: 321-325

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Handle: RePEc:eee:ecolet:v:122:y:2014:i:2:p:321-325
DOI: 10.1016/j.econlet.2013.12.024
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

Keywords: International trade; Gravity; Free trade agreements; Trade diversion;

Find related papers by JEL classification:

  • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
  • F14 - International Economics - - Trade - - - Empirical Studies of Trade
  • F15 - International Economics - - Trade - - - Economic Integration

References listed on IDEAS
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  1. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
  2. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  3. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
  4. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-160, February.
  5. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
  6. I-Hui Cheng & Howard J. Wall, 2005. "Controlling for heterogeneity in gravity models of trade and integration," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 49-63.
  7. María Pía Olivero & Yoto V. Yotov, 2012. "Dynamic gravity: endogenous country size and asset accumulation," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 64-92, February.
  8. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, 09.
  9. Magee Christopher S, 2003. "Endogenous Preferential Trade Agreements: An Empirical Analysis," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-19, December.
  10. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
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Cited by:

  1. Ketenci, Natalya, 2014. "The Effect of the European Union Customs Union on the Balance of Trade in Turkey," MPRA Paper 54662, University Library of Munich, Germany.
  2. Gabriel Felbermayr & Jasmin Gröschl & Thomas Steinwachs, 2016. "The Trade Effects of Border Controls: Evidence from the European Schengen Agreement," ifo Working Paper Series Ifo Working Paper No. 213, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  3. Gabriel Felbermayr & Jasmin Gröschl & Thomas Steinwachs, 2016. "Handelseffekte von Grenzkontrollen," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 73, June.
  4. Baier, Scott & Kerr, Amanda & Yotov, Yoto, 2017. "Gravity, Distance, and International Trade," School of Economics Working Paper Series 2017-5, LeBow College of Business, Drexel University.
  5. Scott L. Baier & Yoto V. Yotov & Thomas Zylkin, 2016. "On the Widely Differing Effects of Free Trade Agreements: Lessons from Twenty Years of Trade Integration," CESifo Working Paper Series 6174, CESifo Group Munich.
  6. Machado, José A.F. & Santos Silva, J.M.C. & Wei, Kehai, 2016. "Quantiles, corners, and the extensive margin of trade," European Economic Review, Elsevier, vol. 89(C), pages 73-84.
  7. Gabriel Felbermayr & Rahel Aichele & Inga Heiland & Arne Melchior & Marina Steininger, 2016. "TTIP – Potential Effects on Norway," ifo Working Paper Series Ifo Working Paper No. 228, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  8. Piermartini, Roberta & Yotov, Yoto V., 2016. "Estimating trade policy effects with structural gravity," WTO Staff Working Papers ERSD-2016-10, World Trade Organization (WTO), Economic Research and Statistics Division.
  9. Toshiyuki Matsuura & Kazunobu Hayakawa & Nuttawut LAKSANAPANYAKUL & Yuta Watabe, 2014. "Price and Quality Changes in Outsiders of Regional Trade Agreements," Working Papers e84, Tokyo Center for Economic Research.
  10. Sorgho, Zakaria, 2014. "RTAs’ Proliferation and Trade-diversion effects: Evidence of the “Spaghetti Bowl” Phenomenon," MPRA Paper 60503, University Library of Munich, Germany.

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