IDEAS home Printed from https://ideas.repec.org/a/ris/integr/0080.html
   My bibliography  Save this article

An Industrial Analysis of Trade Creation and Diversion Effects of NAFTA

Author

Listed:
  • Karemera, David

    (South Carolina State University)

  • Ojah, Kalu

    (Saint Louis University)

Abstract

Welfare effects of economic integration are often studied with aggregate data, and as such provide limited insights about the effects of trade pacts to individual economic agents in the free trade area. In this study a three-digit disaggregated commodity/ industry data grouped under the Standard International Trade Classification is used to empirically assess the economic benefits of the North American Free Trade Agreement (NAFTA). Import demand elasticities from a dynamic demand model were used to estimate both trade creation and trade diversion effects of removing all tariff barriers from among NAFTA countries – US, Canada and Mexico. Results show that US imports of crude oil and petrole - um products from Canada and most US imports from Mexico are more sensi - tive to domestic prices than to bilateral import prices. Further, results indicate that US will benefit the most from the initial trade effects of NAFTA, while Mex - ico will benefit the least. Specifically, US exporters of automatic data processing equipment, and pulp and waste paper products will benefit the most from increased trade with NAFTA countries. Mexican exporters of crude oil, and veg - etables and fresh produce; and Canadian exporters of paper and paperboard products will be the most beneficiaries of NAFTA among exporters in these respective countries.

Suggested Citation

  • Karemera, David & Ojah, Kalu, 1998. "An Industrial Analysis of Trade Creation and Diversion Effects of NAFTA," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 13, pages 400-425.
    • Handle: RePEc:ris:integr:0080
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kyoji Fukao & Toshihiro Okubo, 2004. "Why Has the Border Effect in the Japanese Market Declined? The Role of Business Networks in East Asia," Discussion papers 04016, Research Institute of Economy, Trade and Industry (RIETI).
    2. HAYAKAWA Kazunobu & JINJI Naoto & MATSUURA Toshiyuki & YOSHIMI Taiyo, 2019. "Costs of Utilizing Regional Trade Agreements," Discussion papers 19054, Research Institute of Economy, Trade and Industry (RIETI).
    3. Magee, Christopher S.P., 2008. "New measures of trade creation and trade diversion," Journal of International Economics, Elsevier, vol. 75(2), pages 349-362, July.
    4. Hayakawa, Kazunobu & Kimura, Fukunari & Laksanapanyakul, Nuttawut, 2016. "Firm-level trade creation and diversion of regional trade agreements in Thailand," IDE Discussion Papers 621, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. Mary E. Burfisher & Sherman Robinson & Karen Thierfelder, 2001. "The Impact of NAFTA on the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 125-144, Winter.
    6. Toshiyuki Matsuura & Kazunobu Hayakawa & Nuttawut LAKSANAPANYAKUL & Yuta Watabe, 2014. "Price and Quality Changes in Outsiders of Regional Trade Agreements," Working Papers e084, Tokyo Center for Economic Research.
    7. Christopher S.P. Magee, 2017. "The Increasing Irrelevance of Trade Diversion," Kyklos, Wiley Blackwell, vol. 70(2), pages 278-305, May.
    8. Fukao, Kyoji & Okubo, Toshihiro & Stern, Robert M., 2003. "An econometric analysis of trade diversion under NAFTA," The North American Journal of Economics and Finance, Elsevier, vol. 14(1), pages 3-24, March.
    9. Naoto JINJI & Kazunobu HAYAKAWA & Nuttawut LAKSANAPANYAKUL & Toshiyuki MATSUURA & Taiyo YOSHIMI, 2020. "A New Approach for Quantifying the Costs of Utilizing Regional Trade Agreements," Discussion papers e-19-010, Graduate School of Economics , Kyoto University.
    10. Howard J. Wall, 2003. "NAFTA and the geography of North American trade," Review, Federal Reserve Bank of St. Louis, vol. 85(Mar), pages 13-26.
    11. Hyeryeon Jung & Yoon Heo, 2005. "NAFTA and Flow of FDI into Mexico: Investment Diversion or Stock Adjustment?," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 8(2), pages 71-91, June.

    More about this item

    Keywords

    Industrial Analysis; Trade Creation;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:integr:0080. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Yunhoe Kim (email available below). General contact details of provider: https://edirc.repec.org/data/desejkr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.