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Evaluating the Trade Effect of Developing Regional Trade Agreements: a Semi-parametric Approach

Author

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  • Coulibaly, Souleymane

    () (The World Bank)

Abstract

Many recent papers have pointed to ambiguous trade effects of developing regional trade agreements, calling for a reassessment of their economic merits. This paper focuses on 22 RTAs involving mostly developing countries and covering all the continents and use trade flows over the period 1962-2006. It proposes a two-step estimation approach to assess their trade impact: first estimate a gravity equation excluding the RTA variables, and then use the trade residuals estimated to run a kernel regression for each of the RTAs. This approach allows capturing the non-monotonic trade effects of the RTAs over time while imposing minimal structure on the model, and is flexible enough to be extended to any new RTA. As existing RTAs are deepened and new ones are being negotiated, ensuring that trade creation dominates trade diversion will be essential, particularly in the post-crisis world where resources will be limited for all countries.

Suggested Citation

  • 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.
  • Handle: RePEc:ris:integr:0491
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Csilla, Lakatos & Lars, Nilsson, 2015. "The EU-Korea free trade agreement: Anticipation, trade policy uncertainty and impact," DG TRADE Chief Economist Notes 2015-2, Directorate General for Trade, European Commission.
    2. Csilla Lakatos & Lars Nilsson, 2017. "The EU-Korea FTA: anticipation, trade policy uncertainty and impact," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(1), pages 179-198, February.
    3. Festus Ebo Turkson, "undated". "Trade Agreements and Bilateral Trade in Sub-Saharan Africa: Estimating the Trade Effects of the EU-ACP PTA and RTAs," Discussion Papers 12/07, University of Nottingham, CREDIT.
    4. World Bank, 2012. "Reshaping Economic Geography of East Africa : From Regional to Global Integration, Volume 2. Technical Annexes," World Bank Other Operational Studies 11916, The World Bank.
    5. repec:arp:bmerar:2017:p:57-61 is not listed on IDEAS
    6. FE, Doukouré Charles, 2010. "Réduction de Droits de Douane et Convergence Réelle dans l'UEMOA
      [Tariffs Reduction and Real Convergence in WAEMU]
      ," MPRA Paper 26763, University Library of Munich, Germany.
    7. Festus Ebo Turkson, "undated". "Using Observable Trade Data to Measure Bilateral Trade Costs in Sub-Saharan Africa," Discussion Papers 12/06, University of Nottingham, CREDIT.
    8. Jean-Marc Siroën & Aycil Yucer, 2012. "The impact of MERCOSUR on trade of Brazilian states," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(3), pages 553-582, September.
    9. repec:eco:journ1:2017-04-82 is not listed on IDEAS
    10. repec:ksa:szemle:1720 is not listed on IDEAS
    11. KURTOVIC, Safet & HALILI, Blerim & MAXHUNI, Nehat & TALOVIC, Sead, 2016. "Liberalization of Trade with the EFTA Countries: Some Evidence from Bosnia and Herzegovina - La liberalizzazione del commercio con i paesi dell’ EFTA: evidenze dalla Bosnia e Herzegovina," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 69(3), pages 213-232.
    12. Afesorgbor, Sylvanus Kwaku & van Bergeijk, Peter A.G., 2011. "Multi-membership and effectiveness of regional trade agreements in Western and Southern Africa: a comparative study of ECOWAS and SADC," Proceedings of the German Development Economics Conference, Berlin 2011 1, Verein für Socialpolitik, Research Committee Development Economics.

    More about this item

    Keywords

    regional trade agreement; kernel regression; two-step estimation; trade impact; gravity model;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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